<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1996
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. 44
/X/
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 46
/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.
LGT ASSET MANAGEMENT, INC. KIRKPATRICK & LOCKHART LLP
50 CALIFORNIA STREET, 27TH FLOOR 1800 MASSACHUSETTS AVENUE, N.W.,
SAN FRANCISCO, CALIFORNIA 94111 2ND FLOOR
(NAME AND ADDRESS OF AGENT FOR SERVICE) WASHINGTON, D.C. 20036
(202) 778-9000
</TABLE>
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485
/X/ ON FEBRUARY 29, 1996 PURSUANT TO PARAGRAPH (B) OF RULE 485
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (A)(1) OF RULE 485
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
/X/ 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, AS AMENDED,
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, 1995, WAS FILED ON DECEMBER 27, 1995.
CERTAIN SERIES OF THE G.T. INVESTMENT FUNDS, INC. ARE "FEEDER FUNDS" IN A
"MASTER/FEEDER" FUND ARRANGEMENT. THIS POST-EFFECTIVE AMENDMENT NO. 44 INCLUDES
A MANUALLY EXECUTED SIGNATURE PAGE FOR TWO MASTER TRUSTS, GLOBAL INVESTMENT
PORTFOLIO AND GLOBAL HIGH INCOME 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
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund/
GT Global Emerging Markets Fund
-- Prospectus -- Advisor Class
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund/
GT Global Emerging Markets Fund
Part B -- Statement of Additional Information
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund
-- GT Global Emerging Markets Fund
-- Statement of Additional Information -- Advisor Class
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund
-- GT Global Emerging Markets Fund
Part C -- Other Information
Signature Page-- G.T. Investment Funds, Inc.
-- Global Investment Portfolio
-- Global High Income 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: GT Global Currency Fund and GT Global Small Companies Fund.
</TABLE>
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GT GLOBAL FINANCIAL SERVICES FUND GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
GT GLOBAL INFRASTRUCTURE FUND GT GLOBAL HEALTH CARE FUND
GT GLOBAL NATURAL RESOURCES FUND GT GLOBAL TELECOMMUNICATIONS FUND
</TABLE>
The GT GLOBAL HEALTH CARE FUND ("HEALTH CARE FUND") seeks its investment
objective of long-term capital appreciation by investing primarily in securities
of health care companies throughout the world.
The GT GLOBAL TELECOMMUNICATIONS FUND ("TELECOMMUNICATIONS FUND") seeks its
investment objective of long-term growth of capital by investing primarily in
securities of companies throughout the world engaged in development, manufacture
or sale of telecommunications services or equipment.
The GT GLOBAL FINANCIAL SERVICES FUND ("FINANCIAL SERVICES FUND"), GT GLOBAL
INFRASTRUCTURE FUND ("INFRASTRUCTURE FUND"), GT GLOBAL NATURAL RESOURCES FUND
("NATURAL RESOURCES FUND") and GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
("CONSUMER PRODUCTS AND SERVICES FUND") seek their investment objectives of
long-term capital growth by investing all of their investable assets in their
corresponding Portfolios, each of which invests in securities of companies
throughout the world that operate in their respective theme industries.
The Global Financial Services Portfolio ("Financial Services Portfolio") invests
primarily in securities of companies throughout the world that operate within
the financial services industries.
The Global Infrastructure Portfolio ("Infrastructure Portfolio") invests
primarily in securities of companies throughout the world that design, develop
or provide products and services significant to a country's infrastructure.
The Global Natural Resources Portfolio ("Natural Resources Portfolio") 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.
The Global Consumer Products and Services Portfolio ("Consumer Products and
Services Portfolio") invests primarily in securities of companies throughout the
world that manufacture, market, retail or distribute consumer products and
services.
Collectively, the above-named Funds are known as the "GT Global Theme Funds,"
and the Portfolios are known individually as a "Portfolio" and collectively as
the "Portfolios."
Each Portfolio's investment objective is identical to that of its corresponding
Fund. As this structure is different from many other investment companies which
directly acquire and manage their own portfolios, investors should carefully
consider this investment approach. For additional information on the Funds, the
Portfolios and the theme industries in which the GT Global Theme Funds invest,
see "Investment Objectives and Policies" and "Management."
There can be no assurance that any Fund or 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 Funds and the Portfolios are managed and/or administered by LGT Asset
Management, Inc. ("LGT Asset Management"). LGT Asset Management and its
worldwide affiliates are part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services to individual
and institutional investors.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission and, as supplemented or amended from
time to time, is incorporated by reference. The Statement of Additional
Information is available without charge by writing to the Funds at 50 California
Street, 27th Floor, San Francisco 94111, or by calling (800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL THEME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 10
Alternative Purchase Plan................................................................. 14
Investment Objective and Policies......................................................... 15
Risk Factors.............................................................................. 24
How to Invest............................................................................. 32
How to Make Exchanges..................................................................... 38
How to Redeem Shares...................................................................... 39
Shareholder Account Manual................................................................ 41
Calculation of Net Asset Value............................................................ 42
Dividends, Other Distributions and Federal Income Taxation................................ 42
Management................................................................................ 44
Other Information......................................................................... 50
</TABLE>
Prospectus Page 2
<PAGE>
GT 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: Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund seek 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 equity 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
equity 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
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
Consumer Products and Services Fund invests 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
Health Care Fund invests primarily in equity securities of health
care companies throughout the world
Telecommunications Fund invests primarily in equity securities of
companies throughout the world engaged in development, manufacture
or sale of telecommunications services or equipment
Investment Manager: LGT Asset Management, part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
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
Exchange Privileges: Shares of a class of a Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds, which are open-end management investment companies
advised and/or administered by LGT Asset Management
Dividends and Other
Distributions: Dividends paid annually from net investment income and realized
net short-term capital gains; other distributions paid annually
from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans)
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans)
Net Asset Values: Class A and Class B shares of GT Global Theme Funds are 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>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comprising the Liechtenstein Global Trust are indirect subsidiaries of the
Prince of Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVE AND POLICIES. The Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund seek
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."
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"). 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."
The Financial Services Fund seeks its investment 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. 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 companies throughout the world
that design, develop or provide products and services significant to a country's
infrastructure. 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 stocks and
warrants to acquire such securities issued by companies throughout the world
that own, explore or develop natural resources and other basic commodities, or
supply goods and services to such companies. 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
companies throughout the world that manufacture, market, retail or distribute
consumer products and services. See "Investment Objective and Policies."
The Health Care Fund seeks its investment objective by normally investing 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.
See "Investment Objective and Policies."
The Telecommunications Fund seeks its investment objective by normally investing
at least 65% of its total assets in common and preferred stocks and warrants to
acquire such securities issued by companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
See "Investment Objective and Policies."
The remainder of each of the foregoing Theme Portfolio's assets may be invested
in debt securities issued by companies in their respective industries and/or in
equity and debt securities of companies outside those industries, which, in the
opinion of
Prospectus Page 5
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
LGT Asset Management, stand to benefit from developments in those industries.
LGT Asset Management believes that a portfolio of securities of companies
operating in one of the industries described above located throughout the world
presents greater potential for long-term capital growth and appreciation than a
portfolio comprising solely 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. The Theme Portfolios' participation in the
currency, options and futures markets involves certain risks and transaction
costs.
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 Portfolio did not
borrow, but also may enable the Theme Portfolio to retain favorable securities
positions rather than liquidating such positions to meet redemption needs. Each
Theme Portfolio also is authorized to lend securities to broker/dealers or to
other institutional investors.
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 below investment grade debt securities, which may include
(i) corporate debt securities and (ii) debt instruments issued by governments.
Investments of this type are subject to a greater risk of loss of principal and
interest.
Each Theme Portfolio's policy of concentrating its investments in companies in
its particular industries may cause a Fund's net asset value to fluctuate more
than if it invested in a greater number of industries.
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.
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.
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 a particular Fund.
PURCHASES AND REDEMPTIONS. Shares of each Fund's common stock are available
through broker/ dealers who have entered into agreements to sell shares with the
Funds' distributor, GT Global, Inc. ("GT Global"). Shares also may be acquired
directly through GT Global or through exchanges of shares of the other GT Global
Mutual Funds. See "How to Invest" and "Shareholder Account Manual." Shares may
be redeemed either through broker/dealers or the Funds' transfer agent, GT
Global Investor Services, Inc. ("Transfer Agent"). See "How to Redeem Shares"
and "Shareholder Account Manual."
Prospectus Page 6
<PAGE>
GT 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>
GT GLOBAL
GT GLOBAL GT 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........... 0.98% 0.98% 0.93% 0.93% 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)................... 0.43% 0.43% 0.40% 0.40% 0.92% 0.92%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses........................... 1.91% 2.41% 1.83% 2.33% 2.40% 2.90%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
GT GLOBAL
GT GLOBAL GT 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..................................... 0.98% 0.98% 0.98% 0.98% 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)....... 0.92% 0.92% 0.92% 0.92% 0.92% 0.92%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses............... 2.40% 2.90% 2.40% 2.90% 2.40% 2.90%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</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."
+ The Funds 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 1.41% for the Health Care Fund,
1.33% for the Telecommunications Fund, 1.90% for the Financial Services Fund,
1.90% for the Infrastructure Fund, 1.90% for the Natural Resources Fund, and
1.90% for the Consumer Products and Services Fund.
Prospectus Page 7
<PAGE>
GT 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>
GT GLOBAL GT GLOBAL TELECOMMUNICATIONS
HEALTH CARE
FUND FUND
---------------------------- ----------------------------
ONE THREE FIVE TEN ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ----- ----- ----- ---- ----- ----- -----
Class A Shares (1).................... $66 $105 $148 $276 $65 $102 $144 $267
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (2).................. $74 $106 $153 $303 $73 $103 $149 $293
Assuming no redemption.............. $24 $ 76 $133 $303 $23 $ 73 $129 $293
<CAPTION>
GT GLOBAL
FINANCIAL SERVICES
FUND
----------------------------
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
Class A Shares (1).................... $ 70 $120 $174 $335
<S> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (2).................. $ 79 $121 $180 $365
Assuming no redemption.............. $ 29 $ 91 $160 $365
</TABLE>
<TABLE>
<CAPTION>
GT GLOBAL GT GLOBAL GT GLOBAL
INFRASTRUCTURE NATURAL RESOURCES CONSUMER PRODUCTS 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
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
Class A Shares (1)................... $70 $120 $174 $335 $70 $120 $174 $335 $ 70 $120 $174 $335
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (2)................. $79 $121 $180 $365 $79 $121 $180 $365 $ 79 $121 $180 $365
Assuming no redemption............. $29 $ 91 $160 $365 $29 $ 91 $160 $365 $ 29 $ 91 $160 $365
<FN>
- ------------------
(1) Assumes payment of maximum sales charge by investor.
(2) Assumes deduction of maximum applicable contingent deferred sales charge.
* 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, Telecommunications Fund, Financial Services Fund,
Infrastructure Fund and Natural Resources Fund and their corresponding
Portfolios are based on the Funds' fiscal year ended October 31, 1995.
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. See "Management" herein and 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
0.98%, 7.67% and 9.14%, respectively, and the amount of expenses an
investor would pay, assuming redemption after one, three, five and ten
years, would be $135, $322, $529 and $1,143, 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 Portfolio would have been 0.98%, 7.67% and
9.64%, respectively, and the amount of expenses an investor would pay,
assuming redemption after one, three, five and ten years would be $146,
$334, $553, and $1,213, respectively. Assuming no redemption, the amount of
expenses an investor would pay after one, three, five and ten years, would
be $96, $304, $533 and $1,213, 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 0.98%, 1.15% and
2.62%, respectively, and the amount of expenses an investor would pay,
assuming redemption after one, three, five and ten years, would be $72,
$126, $185 and $361, 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 0.98%, 1.15% and 3.12%, respectively, and the
amount of expenses an investor would pay, assuming redemption after one,
three, five and ten years, would be $81, $128, $192 and $392, respectively.
Assuming no redemption, the amount of expenses an investor would pay after
one, three, five and ten years, would be $31, $98, $172 and $392,
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 0.98%, 2.00% and
3.47%, respectively, and the amount of expenses an investor would pay,
assuming redemption after one, three, five and ten years, would be $81,
$152, $230 and $463, 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 0.98%, 2.00% and 3.97%, respectively, and the
amount of expenses an investor would pay, assuming redemption after one,
three, five and ten years would be $90, $155, $239, and $499, respectively.
Assuming no redemption, the amount of expenses an investor would pay after
one, three, five and ten years would be $40, $125, $219 and $499,
respectively.
</TABLE>
Prospectus Page 8
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Without reimbursements, "Investment management and administration fees,"
"Other expenses" and "Total Fund Operating Expenses" for Class A shares of
the Consumer Products and Services Fund and its corresponding Portfolio
would have been 0.98%, 12.16% and 13.63%, respectively, and the amount of
expenses an investor would pay, assuming redemption after one, three, five
and ten years, would be $177, $457, $765 and $1,680, respectively. Without
reimbursements, "Investment management and administration fees," "Other
expenses" and "Total Fund Operating Expenses" for Class B shares of the
Consumer Products and Services Fund and its corresponding Portfolio would
have been 0.98%, 12.16% and 14.13%, respectively, and the amount of
expenses an investor would pay, assuming redemption after one, three, five
and ten years, would be $191, $475, $801 and $1,777, respectively. Assuming
no redemption, the amount of expenses an investor would pay after one,
three, five and ten years, would be $141, $445, $781 and $1,777,
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 9
<PAGE>
GT 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 each Fund for the
periods shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand, L.L.P., independent accountants, whose report
thereon is also included in the Statement of Additional Information.
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
AUGUST 7,
1989
(COMMENCEMENT
OF
YEAR ENDED OCTOBER 31, OPERATIONS)
---------------------------------------------------------- TO OCTOBER
1995 1994* 1993* 1992 1991 1990 31, 1989
-------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
period.............. $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83 $ 11.43
-------- -------- -------- -------- -------- -------- -------------
Income from
investment
operations:
Net investment
income (loss)..... (0.15) (0.22) (0.15) (0.18) 0.03 0.06 0.01
Net realized and
unrealized gain
(loss) on
investments....... 3.73 2.02 0.57 (1.53) 6.78 0.97 0.39
-------- -------- -------- -------- -------- -------- -------------
Net increase
(decrease) from
investment
operations........ 3.58 1.80 0.42 (1.71) 6.81 1.03 0.40
-------- -------- -------- -------- -------- -------- -------------
Distributions:
Net investment
income............ (0.00) (0.00) (0.00) (0.00) (0.07) (0.03) (0.00)
Net realized gain
on investments.... (1.34) (0.00) (0.00) (0.14) (0.28) (0.00) (0.00)
In excess of net
realized gain on
investments....... (0.00) (0.06) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------------
Total
distributions... (1.34) (0.06) (0.00) (0.14) (0.35) (0.03) (0.00)
-------- -------- -------- -------- -------- -------- -------------
Net asset value, end
of period........... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- -------- -------- -------------
Total investment
return (c).......... 19.79% 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)... $426,380 $438,940 $461,113 $655,867 $552,897 $145,544 $49,903
Ratio of net
investment income
(loss) to average
net assets.......... (0.72)% (1.23)% (0.90)% (0.97)% 0.19% 0.66% 3.2%(b)
Ratio of expenses to
average net assets:
With expense
reduction......... 1.85% 1.98% 2.00% 2.05% 2.01% 2.39% 2.5%(b)
Without expense
reduction......... 1.91% --%(d) --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover
rate +++............ 99% 64% 61% 30% 23% 34% 183%(b)
<CAPTION>
CLASS B++
---------------------------------------
YEAR ENDED OCTOBER 31, APRIL 1,
1993
------------------------- TO OCTOBER
1995* 1994* 31, 1993*
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
period.............. $ 19.46 $ 17.80 $ 15.59
----------- ----------- -----------
Income from
investment
operations:
Net investment
income (loss)..... (0.25) (0.32) (0.14)
Net realized and
unrealized gain
(loss) on
investments....... 3.69 2.02 2.35
----------- ----------- -----------
Net increase
(decrease) from
investment
operations........ 3.44 1.70 2.21
----------- ----------- -----------
Distributions:
Net investment
income............ (0.00) (0.00) (0.00)
Net realized gain
on investments.... (1.34) (0.00) (0.00)
In excess of net
realized gain on
investments....... (0.00) (0.04) (0.00)
----------- ----------- -----------
Total
distributions... (1.34) (0.04) (0.00)
----------- ----------- -----------
Net asset value, end
of period........... $ 21.56 $ 19.46 $ 17.80
----------- ----------- -----------
Total investment
return (c).......... 19.17% 9.55% 14.2%(a)
Ratios and
supplemental data:
Net assets, end of
period (in 000's)... $ 70,740 $ 39,100 $ 8,604
Ratio of net
investment income
(loss) to average
net assets.......... (1.22)% (1.73)% (1.40)%(b)
Ratio of expenses to
average net assets:
With expense
reduction......... 2.35% 2.48% 2.54%(b)
Without expense
reduction......... 2.41% --% --%(d)
Portfolio turnover
rate +++............ 99% 64% 61%
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover 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.
(d) Calculation of "Ratios of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
Prospectus Page 10
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------- ---------------------
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO OPERATIONS) TO
OCTOBER 31, 1995* OCTOBER 31, 1995*
--------------------- ---------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................... $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income (loss)......................... 0.02** (0.04)**
Net realized and unrealized gain on investments...... 3.14 3.14
------- -------
Net increase from investment operations.............. 3.16 3.10
------- -------
Net asset value, end of period......................... $ 14.59 $ 14.53
------- -------
------- -------
Total investment return (c)............................ 27.65%(b) 27.12%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................... $ 4,082 $ 2,959
Ratio of net investment income (loss) to average net
assets:
With expense reductions and reimbursement by LGT
Asset
Management.......................................... 0.20%(a) (0.30)%(a)
Without expense reductions and reimbursement by LGT
Asset Management.................................... (11.11)%(a) (11.61)%(a)
Ratio of expenses to average net assets:
With expense reductions and reimbursement by LGT
Asset
Management.......................................... 2.32%(a) 2.82%(a)
Without expense reductions and reimbursement by LGT
Asset Management.................................... 13.63%(a) 14.13%(a)
</TABLE>
- ------------------
(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.
** Before reimbursement by LGT Asset Management, net investment income per
share would have been reduced by $1.12 and $1.04 for Class A and Class B,
respectively.
Prospectus Page 11
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------------------
JANUARY 27, 1992
(COMMENCE-
YEAR ENDED OCTOBER 31, MENT OF OPERATIONS)
-------------------------------------------------------------- TO
1995 1994 (C) 1993 OCTOBER 31, 1992
-------------------- -------------------- ---------------- -------------------
Per Share Operating Performance:
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 17.80 $ 16.92 $ 11.16 $ 11.43
----------- ----------- ---------------- ----------
Income from investment operations:
Net investment income (loss).... (0.09) (0.01) 0.08 0.14*
Net realized and unrealized gain
(loss) on investments.......... (0.43) 1.17 5.83 (0.41)
----------- ----------- ---------------- ----------
Net increase (decrease) from
investment operations.......... (0.52) 1.16 5.91 (0.27)
----------- ----------- ---------------- ----------
Distributions:
Net investment income........... 0.00 (0.01) (0.15) (0.00)
Net realized gain on
investments.................... (0.86) (0.27) (0.00) (0.00)
----------- ----------- ---------------- ----------
Total distributions........... (0.86) (0.28) (0.15) (0.00)
----------- ----------- ---------------- ----------
Net asset value, end of period.... $ 16.42 $ 17.80 $ 16.92 $ 11.16
----------- ----------- ---------------- ----------
----------- ----------- ---------------- ----------
Total investment return (d)....... (2.88)% 7.02% 53.6% (2.4)%(a)
Ratios and supplemental data:
Net assets, end of period (in
000's)........................... $ 1,353,722 $ 1,644,402 $ 1,223,340 $442,862
Ratio of net investment income
(loss) to average net assets..... (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to average net
assets:
With expense reductions......... 1.77% 1.8% 2.0% 2.3%*(b)
Without expense reductions...... 1.83% (e--%) --%(e) --%(e)
Portfolio turnover rate+++........ 62% 57% 41% 4%(b)
<CAPTION>
CLASS B++
--------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
------------------------------------------- APRIL 1, 1993 TO
1995 1994 (C) OCTOBER 31, 1993
-------------------- -------------------- ----------------
Per Share Operating Performance:
<S> <C> <C> <C>
Net asset value, beginning of
period........................... $ 17.66 $ 16.87 $ 12.68
----------- ----------- ----------------
Income from investment operations:
Net investment income (loss).... (0.17) (0.10) 0.01
Net realized and unrealized gain
(loss) on investments.......... (0.43) 1.17 4.18
----------- ----------- ----------------
Net increase (decrease) from
investment operations.......... (0.60) 1.07 4.19
----------- ----------- ----------------
Distributions:
Net investment income........... 0.00 (0.01) (0.00)
Net realized gain on
investments.................... (0.86) (0.27) (0.00)
----------- ----------- ----------------
Total distributions........... (0.86) (0.28) (0.00)
----------- ----------- ----------------
Net asset value, end of period.... $ 16.20 $ 17.66 $ 16.87
----------- ----------- ----------------
----------- ----------- ----------------
Total investment return (d)....... (3.37)% 6.50% 33.0%(a)
Ratios and supplemental data:
Net assets, end of period (in
000's)........................... $ 1,111,520 $ 1,184,081 $455,335
Ratio of net investment income
(loss) to average net assets..... (0.99)% (0.52)% 0.3%(b)
Ratio of expenses to average net
assets:
With expense reductions......... 2.27% 2.3% 2.5%(b)
Without expense reductions...... 2.33% (e--%) --%(e)
Portfolio turnover rate+++........ 62% 57% 41%
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management 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 per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 12
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
GT GLOBAL FINANCIAL SERVICES FUND
---------------------------------------------------
CLASS A
------------------------
MAY 31, CLASS B
1994 ------------------------
(COMMENCE- MAY 31,
MENT OF 1994
OPERATIONS) (COMMENCE-
YEAR TO MENT OF
ENDED OCTOBER YEAR ENDED OPERATIONS)
OCTOBER 31, 31, OCTOBER 31, TO OCTOBER
1995(D) 1994 1995(D) 31, 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.62 $ 11.43 $ 11.60 $ 11.43
----------- ---------- ----------- ----------
Income from investment operations:
Net investment income
(loss)+.............................. 0.17 0.02 0.11 0.00
Net realized and unrealized gain
(loss) on investments................ 0.13 0.17 0.12 0.17
----------- ---------- ----------- ----------
Net increase (decrease) from investment
operations............................. 0.30 0.19 0.23 0.17
----------- ---------- ----------- ----------
Distributions to shareholders:
From net investment income............ 0.00 0.00 0.00 0.00
----------- ---------- ----------- ----------
Total distributions................. 0.00 0.00 0.00 0.00
Net asset value, end of period.......... $ 11.92 $ 11.62 $ 11.83 $ 11.60
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
Total investment return (c)............. 2.58% 1.66%(b) 1.98% 1.49%(b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $ 5,687 $ 3,175 $ 4,548 $ 2,235
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 1.46% 0.66%(a) 0.96% 0.16%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... (5.34)% (7.26)%(a) (5.84)% (7.76)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 2.34% 2.40%(a) 2.84% 2.90%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... 9.14% 10.32%(a) 9.64% 10.82%(a)
<CAPTION>
GT GLOBAL INFRASTRUCTURE FUND
---------------------------------------------------
CLASS A CLASS B
------------------------ ------------------------
MAY 31, MAY 31,
1994 1994
(COMMENCE- (COMMENCE-
MENT OF MENT OF
OPERATIONS) OPERATIONS)
YEAR TO YEAR TO
ENDED OCTOBER ENDED OCTOBER
OCTOBER 31, 31, OCTOBER 31, 31,
1995 1994 1995 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 11.43 $ 12.45 $ 11.43
----------- ---------- ----------- ----------
Income from investment operations:
Net investment income
(loss)+.............................. (0.03) 0.01 (0.09) (0.01)
Net realized and unrealized gain
(loss) on investments................ (0.33) 1.03 (0.33) 1.03
----------- ---------- ----------- ----------
Net increase (decrease) from investment
operations............................. (0.36) 1.04 (0.42) 1.02
----------- ---------- ----------- ----------
Distributions to shareholders:
From net investment income............ 0.00 0.00 0.00 0.00
----------- ---------- ----------- ----------
Total distributions................. 0.00 0.00 0.00 0.00
Net asset value, end of period.......... $ 12.11 $ 12.47 $ 12.03 $ 12.45
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
Total investment return (c)............. (2.89)% 9.10%(b) (3.37)% 8.92%( b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $ 36,241 $ 23,615 $ 50,181 $ 30,954
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... (0.32)% 0.41%(a) (0.82)% (0.09)%( a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... (0.58)% (0.47%)(a) (1.08)% (0.97)%( a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 2.36% 2.40%(a) 2.86% 2.90%( a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... 2.62% 3.28%(a) 3.12% 3.78%( a)
<CAPTION>
GT GLOBAL NATURAL RESOURCES FUND
---------------------------------------------------
CLASS A CLASS B
------------------------ ------------------------
MAY 31, MAY 31,
1994 1994
(COMMENCE- (COMMENCE-
MENT OF MENT OF
OPERATIONS) OPERATIONS)
YEAR TO YEAR TO
ENDED OCTOBER ENDED OCTOBER
OCTOBER 31, 31, OCTOBER 31, 31,
1995 1994 1995 1994
----------- ---------- ----------- ----------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.41 $ 11.43 $ 12.38 $ 11.43
----------- ---------- ----------- ----------
Income from investment operations:
Net investment income
(loss)+.............................. 0.04 0.06 (0.02) 0.03
Net realized and unrealized gain
(loss) on investments................ (0.98) 0.92 (0.98) 0.92
----------- ---------- ----------- ----------
Net increase (decrease) from investment
operations............................. (0.94) 0.98 (1.00) 0.95
----------- ---------- ----------- ----------
Distributions to shareholders:
From net investment income............ (0.03) 0.00 (0.02) 0.00
----------- ---------- ----------- ----------
Total distributions................. (0.03) 0.00 (0.02) 0.00
Net asset value, end of period.......... $ 11.44 $ 12.41 $ 11.36 $ 12.38
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
Total investment return (c)............. 7.58% 8.57%(b) (8.05)% 8.31%(b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $ 12,598 $ 14,797 $ 13,978 $ 13,404
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 0.41% 2.63%(a) (0.09)% 2.13%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... (0.69)% 0.65%(a) (1.19)% 0.15%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 2.37% 2.40%(a) 2.87% 2.90%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... 3.47% 4.38%(a) 3.97% 4.88%(a)
</TABLE>
- ------------------------
* 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.
+ Before reimbursement by LGT Asset Management, the net investment income per
share for Class A and Class B of the Financial Services Fund would have been
reduced by $0.59 and $0.59, respectively, for the period ended October 31,
1995, and $0.23 and $0.23, respectively, from May 31, 1994, to October 31,
1994. Before reimbursement by LGT Asset Management, the net investment
income per share for Class A and Class B of the Infrastructure Fund would
have been reduced by $0.03 and $0.03, respectively, for the period ended
October 31, 1995, and $0.02 and $0.02, respectively, from May 31, 1994, to
October 31, 1994. Before reimbursement by LGT Asset Management, the net
investment income per share for Class A and Class B of the Natural Resources
Fund would have been reduced by $0.14 and $0.13, respectively, for the
period ended October 31, 1995, and $0.04 and $0.04, respectively, from May
31, 1994, to October 31, 1994.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
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GT 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 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.
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 Class B shareholders 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. 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 per share 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 experience higher cumulative
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.
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 Class A and Class B shares of each Fund, assuming an
annual return of 5%.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under a Fund's reduced sales charge plans may be
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GT GLOBAL THEME FUNDS
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 is waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in that Fund. Investors eligible
for complete initial sales charge waivers should purchase Class A shares. The
contingent deferred sales charge is waived for certain redemptions of Class B
shares of a Fund. 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 GT 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.
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
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares are 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 1,000
employees; (b) any account with assets of at least $25,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
at least .50% on the assets in the account; (c) any account with assets of at
least $25,000 if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account; (d) accounts advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust; and (e) any
of the companies comprising or affiliated with Liechtenstein Global Trust.
- --------------------------------------------------------------------------------
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 industries. 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 LGT Asset Management, have potential for above average, long-term growth in
sales and earnings. 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 financial services companies. 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 industries, which, in
the opinion of LGT Asset Management, stand to benefit from developments in the
financial services industries.
In analyzing companies for possible investment by the Financial Services
Portfolio, LGT Asset Management ordinarily looks for several of the following
characteristics: above-average per share earnings growth; high return on
invested capital; a
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<PAGE>
GT GLOBAL THEME FUNDS
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 INDUSTRIES 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 banks; 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.
LGT Asset Management believes an accelerating rate of global economic
interdependence will lead to significant growth in the demand for financial
services. In addition, in LGT Asset Management's view, as the industries evolve,
opportunities will emerge for those companies positioned for the future. Thus,
LGT Asset Management 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 LGT Asset Management, have potential for
above average, long-term growth in sales and earnings. 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 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 LGT
Asset Management, stand to benefit from developments in the infrastructure
industries.
In analyzing companies for possible investment by the Infrastructure Portfolio,
LGT Asset Management 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. Examples of infrastructure
companies include 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 LGT Asset Management's judgment, constitute
services significant to the development of a country's infrastructure.
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<PAGE>
GT GLOBAL THEME FUNDS
LGT Asset Management believes that a country's infrastructure is one key to the
long-term success of that country's economy. LGT Asset Management believes that
adequate energy, transportation, water, and communications systems are essential
elements for long-term economic growth. LGT Asset Management 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, LGT Asset Management expects that the replacement and upgrade of
transportation and communications systems should stimulate growth in the
infrastructure industries of those countries. In addition, in LGT Asset
Management's view, deregulation of telecommunications and electric and gas
utilities in many countries is promoting significant changes in these
industries.
LGT Asset Management 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. In addition, the long-term
growth rates of certain foreign countries' economies may be substantially higher
than the long-term growth rate of the U.S. economy. An integral aspect of
certain foreign countries' economies may be the development or improvement of
their infrastructure.
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 invests in natural resource companies which, in the
opinion of LGT Asset Management, 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 LGT Asset Management, stand to benefit from developments in the
natural resource industries.
The Natural Resources Portfolio may invest in securities of companies in natural
resource industries and commodity groups which, in LGT Asset Management's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Portfolio, LGT Asset
Management 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. Examples of natural resource
companies include 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 LGT Asset Management's
opinion are significant to the ownership and development of natural resources
and other basic commodities.
LGT Asset Management will allocate the Natural Resources Portfolio's investments
among natural resource companies depending on its assessment of
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<PAGE>
GT GLOBAL THEME FUNDS
their long-term growth potential. In assessing these companies' long-term growth
potential, LGT Asset Management 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.
LGT Asset Management 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 is generating new demands for industrial materials
that are affecting world commodities markets. LGT Asset Management believes
these changes are likely to create investment opportunities that benefit from
new sources of supply and/or from changes in commodities prices.
LGT Asset Management also 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. LGT Asset Management 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 LGT Asset Management, have potential
for above average, long-term growth in sales and earnings. 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 Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. 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 LGT Asset Management, stand to benefit from
developments in such industries.
In analyzing companies for possible investment by the Consumer Products and
Services Portfolio, LGT Asset Management 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.
GLOBAL CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. Examples of
consumer products and services companies include 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
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GT GLOBAL THEME FUNDS
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, LGT Asset Management believes, may 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.
LGT Asset Management 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 LGT Asset Management's
view, these changes are likely to create investment opportunities in companies,
both local and multinational, 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 LGT Asset Management,
have potential for above average, long-term growth in sales and earnings. 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 either the revenues or earnings was derived from health care
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 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 LGT Asset Management, stand to benefit from
developments in the health care industries.
In analyzing companies for possible investment by the Health Care Fund, LGT
Asset Management 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 INDUSTRIES INVESTMENT. Examples of health care companies
include those 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
industries, however, are global industries with significant, growing markets
outside of the United States. A sizeable portion of the companies which comprise
the health care industries 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.
LGT Asset Management believes that the 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, LGT Asset Management believes demographics on aging point to a
significant increase in demand from the industrialized nations, as the elderly
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GT GLOBAL THEME FUNDS
account for a growing proportion of worldwide health care spending. Finally, in
LGT Asset Management'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. LGT Asset Management 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 LGT Asset Management, 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 LGT Asset Management, stand to benefit from
developments in the telecommunications industry.
In analyzing companies for possible investment by the Telecommunications Fund,
LGT Asset Management 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 INDUSTRIES INVESTMENT. The telecommunications industry
is composed 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. LGT Asset Management 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 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
narrowcasting); 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.
LGT Asset Management 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 technologies 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
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GT GLOBAL THEME FUNDS
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, LGT Asset Management believes that a portfolio composed only
of securities of U.S. issuers does not provide the greatest potential for return
from a Theme Portfolio investment. LGT Asset Management uses its financial
expertise in markets located throughout the world and the substantial global
resources of Liechtenstein Global Trust in attempting to identify those
countries and companies then providing the greatest potential for long-term
capital appreciation. In this fashion, LGT Asset Management 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.
LGT Asset Management 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 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, the Health
Care Fund's and the Consumer Products and Services Portfolio's total assets.
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"). LGT Asset Management 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.
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, LGT Asset Management 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 invest up to 100% of its total assets in cash (U.S.
dollars, foreign currencies or multinational currency units) and/or high quality
debt securities or money market instruments issued by corporations, the U.S. or
a foreign government. In addition, 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 not rated, determined
by LGT Asset Management 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
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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, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. 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 may lend 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. Income received in
connection with securities lending may be used to offset a Theme Portfolio's
custody fees. Each Theme Portfolio limits its loans of portfolio securities to
an aggregate of 30% of the value of its total assets, measured at the time any
such loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The 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 purchase or sell when-issued securities or enter into forward
commitments only with the intention of actually receiving or delivering the
securities, as the case may be. No income accrues on securities 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.
OTHER POLICIES. The Financial Services Portfolio, Infrastructure Portfolio,
Natural Resources Portfolio, Consumer Products and Services Portfolio and
Telecommunications Fund each may invest up to
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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." LGT Asset Management 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 Services ("S&P") or Moody's Investors Service, Inc.
("Moody's") or deemed to be of equivalent quality in the judgment of LGT Asset
Management. See "Risk Factors -- Risks Associated with Debt Securities." 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 not rated, and are subject to a greater risk of loss of principal and
interest than those of securities rated BBB or above by S&P or Baa or above by
Moody's. The Theme Portfolios may also use instruments (including forward
contracts) often referred to as "derivatives." See "Options, Futures and Forward
Currency Transactions."
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RISK FACTORS
- --------------------------------------------------------------------------------
THEME PORTFOLIOS -- GENERAL
Because of the focus of each Theme Portfolio on its industries, an investment in
each may be more volatile than that of other investment companies that do not
concentrate their investments in such a manner. Moreover, the value of the
shares of each Fund will be especially susceptible to factors affecting the
industries in which it focuses. No Fund should be considered as a complete
investment program.
FINANCIAL SERVICES FUND AND FINANCIAL SERVICES PORTFOLIO
The value of Financial Services Fund shares may be susceptible to factors
affecting the financial services industries. Financial services industries 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 may have an adverse effect on companies in these industries.
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 financial services industries 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 these industries, 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, have reported financial difficulties attributed to increased
competition, regulatory changes, and general economic difficulties.
The financial services area in the United States 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. 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 company 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.
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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
In the United States and foreign countries, infrastructure 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, and 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
In the United States and foreign countries, natural resource 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 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.
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CONSUMER PRODUCTS AND SERVICES FUND AND CONSUMER PRODUCTS AND SERVICES PORTFOLIO
General economic conditions significantly affect consumer products and services
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. The consumer products and services industries
may also 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
Health care industries generally is subject to substantial government regulation
and approval of its products and services; 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 risks than funds investing
in a greater number of industries or issuers.
TELECOMMUNICATIONS FUND
Telecommunications industries 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 market share. In
recent years, these have been companies providing goods and services such as
private and local area networks and telephone set equipment.
FOREIGN INVESTING. 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,
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rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Each Theme Portfolio may invest in issuers domiciled in "emerging markets,"
I.E., those countries determined by LGT Asset Management to have developing or
emerging economies and markets. Emerging market investing 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.
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.
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 Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or 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 for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. 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. Lower quality debt 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 lower quality 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,
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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 may be
subordinated to the claims of 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. A Theme Portfolio 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 portfolio holdings, and the Theme Portfolio may have
limited legal recourse in the event of a default.
LGT Asset Management 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.
LGT Asset Management 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, LGT Asset Management 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 with a similar theme investing solely
in the securities of U.S. companies.
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
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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 LGT Asset Management 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 LGT Asset Management 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 LGT Asset Management
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 a specific market sector 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 a specific 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 Internal Revenue Code of 1986, as amended
("Code"), limit the extent to which a Theme Portfolio may enter into forward
contracts, 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 LGT Asset Management'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 set aside securities in connection with hedging
transactions; and (6) the possible need to defer closing out of
Prospectus Page 29
<PAGE>
GT GLOBAL THEME FUNDS
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 LGT Asset Management 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.
OTHER INFORMATION. The portfolio turnover rate for the fiscal year ended October
31, 1995 was 99% for the Health Care Fund, 170% for the Financial Services
Portfolio, and 240% for the Consumer Products and Services Portfolio. See the
sub-caption "Portfolio Trading and Turnover" in the Statement of Additional
Information. High portfolio turnover (over 100%) involves correspondingly
greater transaction costs in the form of dealer spreads or brokerage commissions
and other costs that a Fund will bear directly, and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders.
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. Because 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. LGT Asset Management and GT Global have
sponsored traditionally structured funds, and, therefore, have limited
experience with funds that invest all their assets in a separate portfolio.
Prospectus Page 30
<PAGE>
GT GLOBAL THEME FUNDS
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 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.
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 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 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 31
<PAGE>
GT 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,
is offered through a separate prospectus only to certain investors. 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 "Purchasing Class A Shares" and "Purchasing Class B Shares" below.
The Funds and GT Global reserve the right to reject any purchase order and to
suspend the offering of shares for a period of time.
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF THE FUNDS. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY
A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000
OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT 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 GT
Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT 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 GT Global or directly through GT
Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, the Funds' distributor, by completing and
signing an Account Application accompanying 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 GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to a
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to 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
Prospectus Page 32
<PAGE>
GT GLOBAL THEME FUNDS
account by bank wire should call the Transfer Agent at the appropriate toll-free
number provided in the Shareholder Account Manual to obtain an account number
and detailed instructions.
CERTIFICATES. 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 GT GLOBAL
RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares 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% *
</TABLE>
* GT Global will pay the following commissions to brokers that initiate and
are responsible for purchases by any single purchaser of Class A shares of
$500,000 or more in the aggregate: 1.00% of the purchase amount up to $3
million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker 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.
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 year 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, GT 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, GT Global may offer these reallowances or
additional payments only to broker/dealers that have sold or may sell
significant amounts of Class A shares. To the extent that GT Global reallows the
full amount of the sales charge to broker/dealers, such broker/dealers may be
deemed to be underwriters under the Securities Act of 1933, as amended.
Commissions also may be paid to broker/dealers and other financial institutions
that initiate purchases of at least $500,000 made pursuant to sales charge
waivers (i) and (vii), described below under "Sales Charge Waivers -- Class A
Shares."
The following 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 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; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored
Prospectus Page 33
<PAGE>
GT GLOBAL THEME FUNDS
by organizations which have at least 100 but less than 1,000 employees.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which LGT Asset Management serves as investment manager and/or
administrator; employees or retired employees of the companies comprising
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers which
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust
departments exercising DISCRETIONARY investment authority with respect to the
money to be invested in the GT Global Mutual Funds provided that the aggregate
amount invested pursuant to this sales charge waiver 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 GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of a Fund's shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in 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 GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October, 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of that Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. 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 GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global Mutual
Funds (other than shares of GT Global Dollar Fund not acquired by exchange)
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their broker/dealer, the Transfer Agent or
Prospectus Page 34
<PAGE>
GT GLOBAL THEME FUNDS
GT Global sufficient information to permit confirmation of qualification. THE
FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI"), an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of a Fund and the Class A shares of other GT Global Mutual Funds (other than GT
Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualifications for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. Purchases of
Class A shares of two or more GT Global Mutual Funds (other than the GT Global
Dollar Fund) may be combined for this purpose, and the Right of Accumulation
also applies to such purchases. If a shareholder within one year 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 one year 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 GT Global Mutual Fund
(other than GT Global Dollar Fund) without the imposition of a contingent
deferred sales charge, although the contingent deferred sales charge described
above will apply to the redemption of the shares acquired through an exchange.
The waivers set forth under "Contingent Deferred Sales Charge Waivers" below
apply to redemptions of Class A shares upon which a contingent deferred sales
charge would otherwise be imposed. For federal income tax purposes, the amount
of the contingent deferred sales charge will reduce the gain or increase the
loss, as the case may be, on the amount realized on redemption. The amount of
any contingent deferred sales charge will be paid to GT 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. See "Calculation of Net Asset Value." No
initial sales charge is imposed. A contingent deferred sales charge, however, is
imposed on certain redemptions of Class B shares. 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 six years after their purchase. Redemptions of most
other Class B shares will be subject to a contingent
Prospectus Page 35
<PAGE>
GT GLOBAL THEME FUNDS
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 realized on the redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for 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 GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(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 GT Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code, other than tax-free rollovers or transfers of
assets, and the proceeds of which are reinvested in Fund shares; (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 a distribution from any retirement plan
or
Prospectus Page 36
<PAGE>
GT GLOBAL THEME FUNDS
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 GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Funds.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Funds in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT 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
GT Global 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
GT 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 when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the GT Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. For more
information about the GT Global Dollar Cost Averaging Program, investors should
consult their brokers or GT Global.
Prospectus Page 37
<PAGE>
GT GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of any Fund may be exchanged for shares of any of the other GT 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 GT Global Mutual Fund shares to be acquired may
be legally made. CLASS A SHARES MAY BE EXCHANGED ONLY FOR CLASS A SHARES OF
OTHER GT GLOBAL MUTUAL FUNDS. CLASS B SHARES MAY BE EXCHANGED ONLY FOR CLASS B
SHARES OF OTHER GT 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." In addition to the
Theme Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL AMERICA GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL DOLLAR FUND
- --------------
* Formerly the G.T. Latin America 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 GT
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 exchanges. The Funds, GT
Global and the Transfer Agent will not be liable for any loss or damage for
acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions. 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 GT 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 38
<PAGE>
GT 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, as
described below, 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 or, in
limited circumstances, Class A 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 39
<PAGE>
GT GLOBAL THEME FUNDS
FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. 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 GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their 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.
A Fund 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).
Prospectus Page 40
<PAGE>
GT 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 GT 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:
GT 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 GT 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: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT 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 GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT 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:
GT 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 GT Global at 1-800-223-2138.
Prospectus Page 41
<PAGE>
GT GLOBAL THEME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time), each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund is the
value of each such Fund's investment in its corresponding Portfolio),
subtracting all of its 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 over-the-counter market in which such securities are
primarily traded, as of the close of business on the day the securities are
being valued, or, lacking any sales, at the last available bid price. Long-term
debt obligations are valued at the mean of representative quoted bid 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 LGT Asset
Management 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 are valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolios' Board of
Trustees, as applicable. Securities and other assets quoted in foreign
currencies are valued in U.S. dollars based on the prevailing exchange rates on
that day.
Certain of the 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. The per share
net asset value of the Advisor Class shares of a Fund generally will be higher
than that of the Class A and Class B shares of that Fund because of the lower
expenses borne by the Advisor Class shares. It is expected, however, that the
net asset value per share of the classes will tend to converge immediately after
the payment of dividends, which will differ by approximately the amount of the
service and distribution expense accrual differential between the classes.
- --------------------------------------------------------------------------------
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 annually distributes 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
Prospectus Page 42
<PAGE>
GT GLOBAL THEME FUNDS
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; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX STATUS
OF DIVIDENDS AND OTHER DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN
CASH OR REINVESTED IN ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders. 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
Prospectus Page 43
<PAGE>
GT GLOBAL THEME FUNDS
the Transfer Agent if the shareholder is uncertain whether a proper taxpayer
identification number is on file with a Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares of a Fund through a redemption
or exchange within 90 days after purchase and (2) subsequently acquires Class A
shares of such Fund or any other GT Global Mutual Fund on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when those shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if shares of a Fund are purchased within 30 days before or after
redeeming other shares of that Fund (regardless of class) at a loss, all or 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 and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolios,
respectively, and have approved contracts with various financial organizations
to provide certain services required by each Fund. 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 for the
Portfolios.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management 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, LGT Asset Management 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 LGT Asset Management
administration fees computed daily and payable monthly at the annualized rate of
0.25% of such Fund's average daily net assets. In addition, each such Fund bears
its pro rata portion of the investment management and administration fees paid
by its corresponding Portfolio to LGT Asset Management. The Financial Services
Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and Consumer
Products and Services Portfolio each pays LGT Asset Management a fee, based on
each such Portfolio's average daily net assets at the annualized rate of .725%
on the first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. For investment management and
administration services provided to the Health Care Fund and Telecommunications
Fund, each such Fund pays LGT Asset Management 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
Prospectus Page 44
<PAGE>
GT GLOBAL THEME FUNDS
.90% on amounts thereafter. These rates are higher than those paid by most
mutual funds. Each Theme Portfolio pays all expenses not assumed by LGT Asset
Management, GT Global or other agents. LGT Asset Management and GT 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 each Fund's Class A and Class
B Shares, respectively.
LGT Asset Management also serves as each Theme Portfolio's pricing and
accounting agent. The monthly fee for these services to LGT Asset Management is
a percentage, not to exceed 0.03% annually, of the Theme Portfolio's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of GT Global Mutual Funds and 0.02% to the assets in excess
of $5 billion, and allocating the result according to each Fund's average daily
net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consists
of GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
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>
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for LGT Asset
San Francisco Management since 1995. Analyst for
LGT Asset Management from 1994 to
1995. 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.
</TABLE>
Prospectus Page 45
<PAGE>
GT 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 Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management 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 Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1993. From 1991 to
1993, Mr. Mahoney was an Investment
Analyst for LGT Asset Management.
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>
Derek H. Webb Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1994. Analyst for
LGT Asset Management from 1992 to
1994. From 1990 to 1992, Mr. Webb was
a student at 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 46
<PAGE>
GT 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 Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1994. Analyst for
LGT Asset Management from 1992 to
1994. From 1990 to 1992, Mr. Webb was
a student at 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).
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 LGT Asset
San Francisco in 1989 Management.
Michael Yellen Research Analyst since 1994 Research analyst for LGT Asset
San Francisco Management since 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 47
<PAGE>
GT 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 LGT Asset
San Francisco Management since 1993. From 1991 to
1993, Mr. Mahoney was an Investment
Analyst for LGT Asset Management.
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 Portfolio Manager since 1993 Portfolio Manager for LGT Asset
San Francisco Management 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).
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for LGT Asset
San Francisco Management since 1995. Analyst for
LGT Asset Management from 1994 to
1995. 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.
</TABLE>
Prospectus Page 48
<PAGE>
GT GLOBAL THEME FUNDS
In placing orders for the Theme Portfolios' securities transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker/dealer. Commissions or
discounts in foreign securities exchanges and 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 the best net results, LGT Asset Management may consider a broker/dealer's
sale of shares of the GT Global Mutual Funds as a factor in considering through
whom portfolio transactions will be effected. Brokerage transactions for the
Fund may be executed through any Liechtenstein Global Trust affiliates.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of the Funds' Class A and Class B shares. Like LGT Asset
Management, GT Global is a subsidiary of Liechtenstein Global Trust with offices
at 50 California Street, 27th Floor, San Francisco, CA 94111. As distributor, GT
Global collects the sales charges imposed on purchases of Class A shares and any
contingent deferred sales charges that may be imposed on certain redemptions of
Class A and Class B shares. GT Global reallows a portion of the sales 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, GT Global pays
a commission equal to 4.00% of the amount invested to broker/dealers who sell
Class B shares. A commission with respect to Class B shares is not paid on
exchanges or certain reinvestments in Class B shares.
GT 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 GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to brokers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/or other events sponsored by the broker/dealer. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of 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 GT 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 GT Global a distribution fee at the annualized
rate of up to 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 GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to each Fund's
Class B shares ("Class B Plan"), each Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of such
Fund's Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of 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.
GT Global's service and distribution expenses include the payment of ongoing
commissions; the cost of any additional compensation paid by GT Global to
broker/dealers; the costs of printing and mailing to prospective investors
prospectuses and other
Prospectus Page 49
<PAGE>
GT GLOBAL THEME FUNDS
materials relating to the Funds; the costs of developing, printing, distributing
and publishing advertisements and other sales literature; and allocated costs
relating to GT Global's 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, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, 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. Under certain circumstances, duplicate mailings of such reports to
the same household may be consolidated. 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. Under certain circumstances, duplicate
mailings of such reports to the same household may be consolidated.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
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
Prospectus Page 50
<PAGE>
GT GLOBAL THEME FUNDS
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. 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, 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.
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. Shares for which no voting
instructions are received will be voted in the same proportion as the shares for
which voting instructions are received. Any information received from the
Financial Services Portfolio, Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio in the Portfolio's report
will be provided to the shareholders of its corresponding Fund.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Funds at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their 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
Prospectus Page 51
<PAGE>
GT GLOBAL THEME FUNDS
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
their portfolios and their operating expenses. These factors and possible
differences in calculation methods should be considered when comparing a Fund's
investment results with those published for other investment companies, other
investment vehicles and unmanaged indices. Each Fund's results also should be
considered relative to the risks associated with its investment objective and
policies. See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global, a
subsidiary of Liechtenstein Global Trust and maintains offices at California
Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the assets of the Portfolios, Health Care
Fund and Telecommunications Fund.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and to the
Theme Portfolios. Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset
Management, GT Global and the Transfer Agent 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 52
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 53
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 54
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 55
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 56
<PAGE>
<TABLE>
<S> <C> <C>
[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR
MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION
/ / NEW ACCOUNT
/ / ACCOUNT REVISION (Account No.:
---------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ / Class B Shares (Not available for purchases of $500,000 or more or for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000
Transfer Agent of the GT Global Mutual Funds, to may be wired or mailed to a Pre-Designated Account
honor any telephone, telex or telegraphic at your bank. (Wiring instructions may be obtained
instructions reasonably believed to be authentic from your bank.) A bank wire service fee may be
for redemption and/or exchange between a similar charged.
class of shares of any of the Funds distributed
by GT Global, Inc. --------------------------------------------------
Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS
/ / I have completed and attached the --------------------------------------------------
Supplemental Application for: Bank Address
/ / AUTOMATIC INVESTMENT PLAN
/ / SYSTEMATIC WITHDRAWAL PLAN --------------------------------------------------
OTHER Bank A.B.A Number Account Number
/ / I/We owned shares of one or more Funds
distributed by GT Global, Inc. as of April --------------------------------------------------
30, 1987 and since that date continuously Names(s) in which Bank Account is Established
have owned shares of such Funds. Attached is A corporation (or partnership) must also submit a
a schedule showing the numbers of each of "Corporate Resolution"
my/our Shareholder Accounts. (or "Certificate of Partnership") indicating the
names and titles of Officers authorized to act on
its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER G.T. FUND ACCOUNTS:
<TABLE>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
</TABLE>
Account Numbers Account Registrations
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
------------------------------------------------------------------------------
Investment Dealer Name
------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's
Name
( )
------------------------------------------------------------------------------
Branch Address Telephone
X
------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
<PAGE>
<TABLE>
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[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 SUPPLEMENTAL APPLICATION
San Francisco, CA SPECIAL INVESTMENT AND
94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
[LOGO]
<TABLE>
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BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C> <C>
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT
an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee
requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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., GT GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, GT GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, GT GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, GT GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
GT GLOBAL HEALTH CARE FUND, GT GLOBAL TELECOMMUNICATIONS FUND, LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON IN SUCH JURISDICTION TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THEPR602075MC
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
GT GLOBAL GOVERNMENT INCOME FUND ("Government Income Fund") seeks a high level
of current income by investing primarily in high quality U.S. and foreign
government securities. The Fund's secondary objectives are capital appreciation
and protection of principal through active management of the maturity structure
and currency exposure of its portfolio.
GT GLOBAL STRATEGIC INCOME FUND ("Strategic Income Fund") primarily seeks high
current income and secondarily seeks capital appreciation. The Fund allocates
its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets.
GT GLOBAL HIGH INCOME FUND ("High Income Fund") primarily seeks high current
income and secondarily seeks capital appreciation. THE FUND, UNLIKE MANY OTHER
INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF
SECURITIES, SEEKS ITS INVESTMENT OBJECTIVES BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN THE GLOBAL HIGH INCOME PORTFOLIO ("PORTFOLIO"), WHICH IN TURN, INVESTS
IN THE DEBT SECURITIES OF ISSUERS LOCATED IN EMERGING MARKETS. THE PORTFOLIO'S
INVESTMENT OBJECTIVES ARE IDENTICAL TO THOSE OF THE FUND. AS THIS STRUCTURE IS
DIFFERENT FROM MANY OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR
OWN PORTFOLIOS, INVESTORS SHOULD CAREFULLY CONSIDER THIS INVESTMENT APPROACH.
FOR ADDITIONAL INFORMATION, SEE "INVESTMENT OBJECTIVES AND POLICIES -- HIGH
INCOME FUND."
There can be no assurance that any Fund or the Portfolio will achieve its
investment objectives.
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 Government Income Fund, the Strategic Income Fund and the High Income Fund
(individually, a "Fund," collectively, the "Funds") are organized as
non-diversified series of G.T. Investment Funds, Inc. Both the Funds and the
Portfolio are managed and/or administered by LGT Asset Management, Inc. ("LGT
Asset Management"). LGT Asset Management and its worldwide affiliates are part
of Liechtenstein Global Trust, a provider of global asset management and private
banking products and services to individual and institutional investors.
The Funds are designed for long-term investors and not as trading vehicles, do
not represent a complete investment program and are not suitable for all
investors. An investment in any of the Funds involves risk factors that should
be reviewed carefully by potential investors. The Strategic Income Fund and the
Portfolio both are authorized to borrow money for investment purposes, which
would increase the volatility of their performance and involves additional
risks. See "Investment Objectives and Policies" and "Risk Factors."
THE STRATEGIC INCOME FUND INVESTS UP TO 50% OF ITS TOTAL ASSETS AND THE GLOBAL
HIGH INCOME PORTFOLIO INVESTS UP TO 100% OF ITS TOTAL ASSETS IN LOWER QUALITY
AND UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY
CONSIDERED THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS
"JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THESE FUNDS. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND
"RISK FACTORS."
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated
herein by reference. The Statement of Additional Information, which may be
amended or supplemented from time to time, is available without charge by
writing to the Funds at 50 California Street, 27th Floor, San Francisco,
California 94111, or by calling (800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL INCOME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 7
Alternative Purchase Plan................................................................. 10
Investment Objectives and Policies........................................................ 11
Risk Factors.............................................................................. 22
How To Invest............................................................................. 27
How To Make Exchanges..................................................................... 33
How to Redeem Shares...................................................................... 34
Shareholder Account Manual................................................................ 37
Calculation of Net Asset Value............................................................ 38
Dividends, Other Distributions and Federal Income Taxation................................ 38
Management................................................................................ 40
Other Information......................................................................... 44
Appendix A -- Description of Debt Ratings................................................. 47
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL INCOME 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 Objectives and
Principal Investments:
Government Income Fund: Primarily seeks high current income and secondarily seeks capital
appreciation and protection of principal; invests primarily in
U.S. and foreign government obligations
Strategic Income Fund: Primarily seeks high current income and secondarily seeks capital
appreciation; allocates its assets among debt securities of
issuers in: (1) the United States; (2) developed foreign
countries; and (3) emerging markets, and selects particular
securities in each sector based on their relative investment merit
High Income Fund: Primarily seeks high current income and secondarily seeks capital
appreciation by investing all of its investable assets in the High
Income Portfolio, which, in turn, invests primarily in debt
securities of issuers located in emerging markets
Investment Manager and LGT Asset Management is part of Liechtenstein Global Trust, a
Administrator: provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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 0.35% 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
Exchange Privileges: Shares of one Fund may be exchanged without a sales charge for
shares of the corresponding class of other GT Global Mutual Funds,
which are open-end management investment companies advised and/or
administered by LGT Asset Management
Dividends and Other Dividends paid monthly from net investment income and net
Distributions: short-term capital gains; other distributions paid annually from
net capital gain and net gains from foreign currency transactions,
if any
Reinvestment: Dividends and distributions may be reinvested automatically in
Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans)
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans)
Net Asset Values: Class A and Class B shares of Government Income Fund, Strategic
Income Fund and High Income Fund are quoted daily in the financial
section of most newspapers
Other Features:
Class A Shares Letter of Intent Reinstatement Privilege
Quantity Discounts Systematic Withdrawal Plan
Right of Accumulation Automatic Investment Plan
Dollar Cost Averaging Program
Class B Shares Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
</TABLE>
------------------------
INVESTMENT MANAGER. LGT Asset Management is the investment manager and
administrator for the Government Income Fund, the Strategic Income Fund and the
Portfolio and the administrator for the High Income Fund. LGT Asset Management
and its worldwide asset management affiliates maintain fully-staffed investment
offices in San Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and
Frankfurt. LGT Asset Management is part of Liechtenstein Global Trust, a
provider of global asset management and private banking products and services to
individual and institutional investors. As of December 31, 1995, total assets
entrusted to Liechtenstein Global Trust totaled approximately $45 billion. The
companies comprising Liechtenstein Global Trust are indirect subsidiaries of the
Prince of Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVES AND POLICIES. Each Fund is organized as a non-diversified
series of G.T. Investment Funds, Inc. ("Company"), a registered open-end
management investment company. Under normal circumstances, the Government Income
Fund invests at least 65% of its total assets in securities issued or guaranteed
by the U.S. or foreign governments, their agencies, authorities and
instrumentalities, and may invest up to 35% of its total assets in investment
grade foreign government securities, investment grade debt securities of U.S. or
foreign issuers and common and preferred stocks and warrants to acquire such
securities. The Fund currently expects to invest in obligations of issuers
located in the United States, Canada, Japan, the Western European nations, New
Zealand and Australia. See "Investment Objectives and Policies."
The Strategic Income Fund seeks its investment objective by investing primarily
in debt obligations allocated among diverse international markets and
denominated in both U.S. and foreign currencies. The Fund normally invests at
least 50% of its total assets in U.S. and foreign debt and other fixed income
securities that, at the time of purchase, are rated investment grade or, if not
rated, determined by LGT Asset Management to be of comparable quality. No more
than 50% of the Fund's total assets may be invested in U.S. and foreign debt and
other fixed income securities that are rated lower than investment grade. The
Fund allocates its assets among debt securities of issuers located in: (1) the
United States; (2) developed foreign countries; and (3) emerging markets. See
"Investment Objectives and Policies."
The High Income Fund seeks its investment objectives by investing all of its
investable assets in the Portfolio, which normally invests at least 65% of its
total assets in debt securities of issuers located in emerging markets. The
Portfolio may invest in bonds, notes and debentures of emerging market
governments as well as debt securities issued or
Prospectus Page 4
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
guaranteed by such governments' agencies or instrumentalities, by the central
banks of emerging market countries or by banks or other companies in such
countries. See "Investment Objectives and Policies."
INVESTMENT TECHNIQUES AND RISK FACTORS. There is no assurance that any Fund or
the Portfolio will achieve its investment objectives. Each Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its
portfolio positions. The value of the debt securities held by each Fund and the
Portfolio generally fluctuates inversely with interest rate movements based on:
(1) changes in the actual and perceived creditworthiness of the issuers of such
securities; and (2) based on changes in foreign currency exchange rates.
The Government Income Fund, the Strategic Income Fund and the Portfolio have
high portfolio turnover rates. See "Investment Objectives and Policies -- Other
Information."
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. Changes in foreign currency exchange
rates may affect a Fund's net asset value, earnings and gains and losses
realized on sales of securities. Some foreign currency values may be volatile
and it is possible that a government will intervene in the currency markets or
impose controls on currency exchanges. Securities of foreign companies may be
less liquid and their prices more volatile than those of securities of
comparable U.S. companies. The participation by the Government Income Fund, the
Strategic Income Fund and the Portfolio in currency, options and futures markets
involves certain risks and transaction costs. Because of the special risks
associated with investing in emerging markets and with borrowing for investment
purposes, an investment in the Strategic Income Fund and the High Income Fund
should be considered speculative.
Many of the debt obligations purchased by the Strategic Income Fund and most of
the debt obligations purchased by the Portfolio are the equivalent of high
yield, high risk bonds. Investment by the Strategic Income Fund and the
Portfolio in debt securities rated below investment grade involves a high degree
of risk. Such investments are considered speculative by nationally recognized
statistical rating organizations ("NRSROs"). See "Risk Factors."
PURCHASES AND REDEMPTIONS. Shares of the Funds' common stock are available
through broker/dealers that have entered into agreements to sell shares with the
Funds' distributor, GT Global, Inc. ("GT Global"). Shares also may be acquired
directly through GT Global or through exchanges of shares of the other GT Global
Mutual Funds. See "How to Invest" and "Shareholder Account Manual." Shares may
be redeemed either through broker/ dealers or the Funds' transfer agent, GT
Global Investor Services, Inc. ("Transfer Agent"). See "How to Redeem Shares"
and "Shareholder Account Manual."
Prospectus Page 5
<PAGE>
GT GLOBAL INCOME 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 each Fund, the annual
operating expenses for the Government Income Fund, and the Strategic Income
Fund, and the aggregate annual operating expenses for the High Income Fund and
the Portfolio are reflected in the following tables+*:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC INCOME HIGH INCOME
INCOME FUND FUND FUND
---------------- ---------------- ----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS TRIANGLE :
Maximum sales charge on purchases of shares (as a % 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
Maximum contingent deferred sales charge................... None 5.0% None 5.0% None 5.0%
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.............. 0.72% 0.72% 0.72% 0.72% 0.73% 0.73%
12b-1 distribution and service fees........................ 0.35% 1.00% 0.35% 1.00% 0.35% 1.00%
Other expenses............................................. 0.31% 0.31% 0.38% 0.38% 0.68% 0.68%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses.............................. 1.38% 2.03% 1.45% 2.10% 1.75% 2.40%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES*
An investor directly or indirectly would have paid the following expenses at the
end of the periods shown on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Government Income Fund
Class A Shares (1)..................................................................... $61 $89 $120 $213
Class B Shares
Assuming a complete redemption at end of period (2).................................. $70 $94 $132 $255
Assuming no redemption............................................................... $20 $64 $112 $255
Strategic Income Fund
Class A Shares (1)..................................................................... $61 $91 $124 $221
Class B Shares
Assuming a complete redemption at end of period (2).................................. $71 $96 $136 $264
Assuming no redemption............................................................... $21 $66 $116 $264
High Income Fund
Class A Shares (1)..................................................................... $64 $100 $140 $257
Class B Shares
Assuming a complete redemption at end of period (2).................................. $74 $106 $153 $302
Assuming no redemption............................................................... $24 $76 $133 $302
</TABLE>
- --------------
(1) Assumes payment of maximum sales charge by an investor.
(2) Assumes payment of the applicable contingent deferred sales charge.
* THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN A FUND. Expenses are based
on the Funds' fiscal years ended October 31, 1995. 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 agent, legal, audit and other operating expenses. See
"Management" herein and the Statement of Additional Information for more
information. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A
REPRESENTATION OF PAST OR FUTURE EXPENSES; EACH FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above table and the assumption in the
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' projected or actual
performance. The Board of Directors of the Company believes that the
aggregate per share expenses of the High Income Fund and the Portfolio will
be less than or approximately equal to the expenses which the Fund would
incur if the assets of that Fund were invested directly in the type of
securities being held by the Portfolio.
+ The Funds 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 Advisor
Class shares of Government Income Fund, Strategic Income Fund and High
Income Fund are estimated to approximate 1.03%, 1.10% and 1.40%,
respectively.
TRIANGLE 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 6
<PAGE>
GT GLOBAL INCOME FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed information concerning income and capital
changes for one share of each class of shares of the Government Income Fund, the
Strategic Income Fund, and the High Income Fund for the periods shown. For the
period March 29, 1988 (commencement of operations) to October 22, 1992, the
Strategic Income Fund was known as G.T. Global Bond Fund and operated under
different investment objectives, policies and limitations. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
fiscal year ended October 31, 1995 and each of the preceding four years have
been audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon also is included in the Statement of Additional Information.
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1995(C) 1994(c) 1993(c) 1992 1991 1990 1989
-------- -------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45 $ 10.86
-------- -------- --------- --------- --------- --------- --------
Income from investment operations:
Net investment income................. 0.62 0.65 0.74 0.92 0.99 1.18 1.15
Net realized and unrealized gain
(loss) on investments................ 0.15 (1.52) 1.34 (0.31) (0.07) (0.02) (0.35)
-------- -------- --------- --------- --------- --------- --------
Net increase (decrease) resulting from
investment operations................ 0.77 (0.87) 2.08 0.61 0.92 1.16 0.80
-------- -------- --------- --------- --------- --------- --------
Distributions:
Net investment income................. (0.59) (0.65) (0.74) (0.83) (1.00) (1.15) (1.20)
Net realized gain on investments...... (0.00) (0.27) (0.00) (0.13) (0.09) (0.00) (0.00)
In excess of net realized gain on
investments.......................... (0.00) (0.55) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital..................... (0.00) (0.10) (0.00) (0.00) (0.00) (0.00) (0.00)
Sources other than net investment
income............................... (0.00) (0.00) (0.10) (0.11) (0.00) (0.00) (0.01)
-------- -------- --------- --------- --------- --------- --------
Total distributions................. (0.59) (1.57) (0.84) (1.07) (1.09) (1.15) (1.21)
-------- -------- --------- --------- --------- --------- --------
Net asset value, end of period.......... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45
-------- -------- --------- --------- --------- --------- --------
-------- -------- --------- --------- --------- --------- --------
Total investment return(d).............. 9.22% (8.87)% 21.9% 6.3% 9.4% 11.9% 7.2%
-------- -------- --------- --------- --------- --------- --------
-------- -------- --------- --------- --------- --------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $385,404 $502,094 $ 708,301 $ 623,387 $ 399,200 $ 259,726 $122,526
Ratio of net investment income to
average net assets..................... 6.98% 6.87% 7.1% 9.0% 9.5% 11.4% 10.7%
Ratio of expenses to average net assets:
With expense reductions............... 1.35% 1.33% 1.4% 1.6% 1.6% 1.8% 1.7%
Without expense reductions............ 1.38% --%** --%** --%** --%** --%** --%**
Portfolio turnover rate +++............. 385% 625% 495% 351% 326% 334% 413%
<CAPTION>
CLASS B++
MARCH 29, 1988 -------------------------------------------------
(COMMENCE- OCTOBER 22,
MENT OF YEAR ENDED OCTOBER 31, 1992 TO
OPERATIONS) TO ----------------------------------- OCTOBER 31,
OCTOBER 31, 1988 1995(C) 1994(c) 1993(c) 1992
------------------ -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 8.64 $ 11.07 $ 9.83 $ 9.87
---------- -------- ----------- ----------- -----------
Income from investment operations:
Net investment income................. 0.49* 0.55 0.59 0.67 0.02
Net realized and unrealized gain
(loss) on investments................ (0.44) 0.14 (1.52) 1.34 (0.06)
---------- -------- ----------- ----------- -----------
Net increase (decrease) resulting from
investment operations................ 0.05 0.69 (0.93) 2.01 (0.04)
---------- -------- ----------- ----------- -----------
Distributions:
Net investment income................. (0.49) (0.53) (0.59) (0.67) (0.00)
Net realized gain on investments...... (0.12) (0.00) (0.27) (0.00) (0.00)
In excess of net realized gain on
investments.......................... (0.00) (0.00) (0.54) (0.00) (0.00)
Return of capital..................... (0.00) (0.00) (0.10) (0.00) (0.00)
Sources other than net investment
income............................... (0.01) (0.00) (0.00) (0.10) (0.00)
---------- -------- ----------- ----------- -----------
Total distributions................. (0.62) (0.53) (1.50) (0.77) (0.00)
---------- -------- ----------- ----------- -----------
Net asset value, end of period.......... $ 10.86 $ 8.80 $ 8.64 $ 11.07 $ 9.83
---------- -------- ----------- ----------- -----------
---------- -------- ----------- ----------- -----------
Total investment return(d).............. 1.1%(a) 8.22% (9.39)% 21.1% (0.4)%(a)
---------- -------- ----------- ----------- -----------
---------- -------- ----------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 57,063 $235,481 $ 262,405 $ 182,972 $ 2,624
Ratio of net investment income to
average net assets..................... 7.41 %(b) 6.33% 6.22% 6.5% 8.0%(b)
Ratio of expenses to average net assets:
With expense reductions............... 1.8 %(b) 2.00% 1.98% 2.0% 1.9%(b)
Without expense reductions............ --%** 2.03% --%** --%** --%**
Portfolio turnover rate +++............. 291%(b) 385% 625% 495% 351%
<FN>
- ------------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, 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.
* Net of $0.01 per share of Fund operating expenses reimbursed by LGT Asset
Management.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(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 7
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1995(C) 1994 1993(c) 1992 1991 1990 1989
-------- -------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20 $ 11.17 $ 11.25
-------- -------- --------- --------- --------- --------- --------
Income from investment operations:
Net investment income................. 0.97 0.79 0.96 0.86 0.84* 1.04* 0.82*
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 0.31 (0.02) (0.17) (0.10)
-------- -------- --------- --------- --------- --------- --------
Net increase (decrease) from
investment operations................ 0.28 (1.35) 3.81 1.17 0.82 0.87 0.72
-------- -------- --------- --------- --------- --------- --------
Distributions:
Net investment income................. (0.80) (0.79) (0.96) (0.83) (0.60) (0.84) (0.80)
Net realized gain on
investments.......................... -- (0.38) (0.37) (0.00) (0.51) (0.00) (0.00)
Return of capital..................... (0.04) (0.21) (0.00) (0.00) (0.00) (0.00) (0.00)
Sources other than net investment
income............................... -- (0.00) (0.12) (0.00) (0.00) (0.00) (0.00)
-------- -------- --------- --------- --------- --------- --------
Total distributions................. (0.84) (1.38) (1.45) (0.83) (1.11) (0.84) (0.80)
-------- -------- --------- --------- --------- --------- --------
Net asset value, end of period.......... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20 $ 11.17
-------- -------- --------- --------- --------- --------- --------
-------- -------- --------- --------- --------- --------- --------
Total investment return(d).............. 3.06% (10.44)% 37.0% 11.1% 7.7% 8.3% 6.8%
-------- -------- --------- --------- --------- --------- --------
-------- -------- --------- --------- --------- --------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $188,165 $275,241 $ 287,870 $ 83,849 $ 55,967 $ 44,545 $ 37,820
Ratio of net investment income to
average net assets.................... 9.64% 6.74% 7.2% 7.6% 7.2%* 9.6%* 7.7%*
Ratio of expenses to average net assets:
With expense reductions............... 1.42% 1.40% 1.7% 1.8% 1.9%* 1.9%* 1.8%*
Without expense reductions............ 1.45% --%** --%** --%** --%** --%** --%**
Ratio of interest expenses to average
net assets............................ N/A 0.10% N/A N/A N/A N/A N/A
Portfolio turnover rate+++.............. 238% 583% 310% 418% 630% 501% 385%
<CAPTION>
MARCH 29, 1988 CLASS B++
(COMMENCE- ------------------------------------------------
MENT OF OCTOBER 22,
OPERATIONS) TO YEAR ENDED OCTOBER 31, 1992 TO
OCTOBER 31, ---------------------------------- OCTOBER 31,
1988 1995(C) 1994(C) 1993(c) 1992
--------------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 10.88 $ 13.60 $ 11.24 $ 11.36
--------------- ------- ----------- ----------- -----------
Income from investment operations:
Net investment income................. 0.45* 0.91 0.73 0.89 0.01
Net realized and unrealized gain
(loss) on investments................ (0.24) (0.69) (2.14) 2.85 (0.13)
--------------- ------- ----------- ----------- -----------
Net increase (decrease) from
investment operations................ 0.21 0.22 (1.41) 3.74 (0.12)
--------------- ------- ----------- ----------- -----------
Distributions:
Net investment income................. (0.39) (0.73) (0.72) (0.89) (0.00)
Net realized gain on
investments.......................... (0.00) -- (0.38) (0.37) (0.00)
Return of capital..................... (0.00) (0.04) (0.21) (0.00) (0.00)
Sources other than net investment
income............................... (0.00) -- (0.00) (0.12) (0.00)
--------------- ------- ----------- ----------- -----------
Total distributions................. (0.39) (0.77) (1.31) (1.38) (0.00)
--------------- ------- ----------- ----------- -----------
Net asset value, end of period.......... $ 11.25 $ 10.33 $ 10.88 $ 13.60 $ 11.24
--------------- ------- ----------- ----------- -----------
--------------- ------- ----------- ----------- -----------
Total investment return(d).............. 1.2%(a) 2.48% (11.02)% 36.2% (1.1)%(a)
--------------- ------- ----------- ----------- -----------
--------------- ------- ----------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,830 $357,852 $ 458,550 $ 310,431 $ 533
Ratio of net investment income to
average net assets.................... 7.2%*(e) 8.99% 6.09% 6.5% N/A(b)
Ratio of expenses to average net assets:
With expense reductions............... 1.7%*(e) 2.07% 2.05% 2.4% N/A(b)
Without expense reductions............ --%** 2.10% --%** --%** --%**
Ratio of interest expenses to average
net assets............................ N/A N/A 0.10% N/A N/A
Portfolio turnover rate+++.............. 340%(e) 238% 583% 310% 418%
</TABLE>
- ------------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, 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 LGT Asset Management of Fund operating expenses of
$0.01, $0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989
and 1988, respectively. Without such reimbursements, the expense ratios
would have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net
investment income to average net assets would have been 7.16%, 9.26%, 7.56%
and 6.42% for the year ended October 31, 1991, 1990, 1989 and 1988,
respectively.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(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.
(e) Annualized.
<TABLE>
<CAPTION>
AVERAGE NUMBER OF
AMOUNT OF DEBT AVERAGE AMOUNT OF FUND'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT DEBT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Class A --
Year Ended October 31, 1995... $ 0 $ 0 21,156,980 $ 0
Class B --
37,786,015
</TABLE>
Prospectus Page 8
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
OCTOBER 22, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
--------------------------------------- TO OCTOBER 31,
1995 1994 (c) 1993 (c) 1992
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.......................... $ 12.56 $ 14.92 $ 11.43 $11.43
----------- ----------- ----------- -------
Income from investment operations:
Net investment income....................................... 1.35 0.94 0.78 0.00
Net realized and unrealized gain (loss) on investments...... (1.09) (1.87) 3.92 0.00
----------- ----------- ----------- -------
Net increase (decrease) from investment operations.......... 0.26 (0.93) 4.70 0.00
----------- ----------- ----------- -------
Distributions:
Net investment income....................................... (1.03) (0.94) (0.78) (0.00)
Net realized gain on investments............................ (0.03) (0.27) (0.00) (0.00)
In excess of net realized gain on investments............... -- (0.22) (0.00) (0.00)
Sources other than net income............................... -- (0.00) (0.43) (0.00)
Return of capital........................................... (0.06) -- -- --
----------- ----------- ----------- -------
Total distributions....................................... (1.12) (1.43) (1.21) (0.00)
----------- ----------- ----------- -------
Net asset value, end of period................................ $ 11.70 $ 12.56 $ 14.92 $11.43
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Total investment return(e).................................... 2.81% (6.45)% 43.6% 0.0%(b)
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................... $ 142,002 $ 167,974 $ 143,171 $ 207
Ratio of net investment income (loss) to average net assets... 11.85% 7.00% 6.4% N/A(d)
Ratio of expenses to average net assets....................... 1.75% 1.57% 2.2% N/A(d)
Ratio of interest expense to average net assets............... N/A 0.22% N/A N/A
<CAPTION>
CLASS B++
---------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------
1995 1994 (c) 1993 (c)
----------- ----------- -----------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.......................... $ 12.56 $ 14.90 $ 11.43
----------- ----------- -----------
Income from investment operations:
Net investment income....................................... 1.27 0.86 0.70
Net realized and unrealized gain (loss) on investments...... (1.09) (1.85) 3.90
----------- ----------- -----------
Net increase (decrease) from investment operations.......... 0.18 (0.99) 4.60
----------- ----------- -----------
Distributions:
Net investment income....................................... (0.96) (0.86) (0.70)
Net realized gain on investments............................ (0.03) (0.27) (0.00)
In excess of net realized gain on investments............... -- (0.22) (0.00)
Sources other than net income............................... -- (0.00) (0.43)
Return of capital........................................... (0.06) -- --
----------- ----------- -----------
Total distributions....................................... (1.05) (1.35) (1.13)
----------- ----------- -----------
Net asset value, end of period................................ $ 11.69 $ 12.56 $ 14.90
----------- ----------- -----------
----------- ----------- -----------
Total investment return(e).................................... 2.07% (6.99)% 42.6%
----------- ----------- -----------
----------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................... $ 214,897 $ 232,423 $ 127,035
Ratio of net investment income (loss) to average net assets... 11.20% 6.35% 5.8%
Ratio of expenses to average net assets....................... 2.40% 2.22% 2.8%
Ratio of interest expense to average net assets............... N/A 0.22% N/A
<CAPTION>
OCTOBER 22, 1992
(COMMENCEMENT
OF OPERATIONS)
TO OCTOBER 31,
1992
----------------
Per Share Operating Performance:
Net asset value, beginning of period.......................... $11.43
-------
Income from investment operations:
Net investment income....................................... 0.00
Net realized and unrealized gain (loss) on investments...... 0.00
-------
Net increase (decrease) from investment operations.......... 0.00
-------
Distributions:
Net investment income....................................... (0.00)
Net realized gain on investments............................ (0.00)
In excess of net realized gain on investments............... (0.00)
Sources other than net income............................... (0.00)
Return of capital........................................... --
-------
Total distributions....................................... (0.00)
-------
Net asset value, end of period................................ $11.43
-------
-------
Total investment return(e).................................... 0.0%(b)
-------
-------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................... $ 53
Ratio of net investment income (loss) to average net assets... N/A(d)
Ratio of expenses to average net assets....................... N/A(d)
Ratio of interest expense to average net assets............... N/A
</TABLE>
- ------------------------
(a) Annualized.
(b) Not annualized.
(c) These selected per share data were calculated based upon weighted average
shares during the year.
(d) Ratios are not meaningful due to short period of operation.
(e) Total investment return does not include sales charges.
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
<TABLE>
<CAPTION>
AVERAGE NUMBER OF
AMOUNT OF DEBT AVERAGE AMOUNT OF FUND'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT DEBT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Class A --
Year Ended October 31, 1995... $ 0 $ 0 12,506,489 $ 0
Class B --
18,165,351
</TABLE>
Prospectus Page 9
<PAGE>
GT GLOBAL INCOME 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 a Fund represent interests in the same 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 Exchange Shares." Each
class has distinct advantages and disadvantages for different investors, and
investors should choose the class that better suits their circumstances and
objectives.
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
0.35% 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 Class B shareholders pay a contingent deferred sales charge of
up to 5% of the lesser of the original purchase price or the net asset value of
Class B shares at the time of redemption. The higher service and distribution
fees paid by the Class B shares of each Fund will cause that class to have a
higher expense ratio and to pay lower dividends per share than Class A shares of
the Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares 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 a Fund's Class B shares will approximate or
exceed the expense of the applicable 4.75% maximum initial sales charge plus the
0.35% service and distribution fees on that Fund's Class A shares. For example,
if net asset value remains constant, the Class B shares' service and
distribution fees would be equal to the Class A shares' initial maximum sales
charge and service and distribution fees approximately seven years after
purchase. Thereafter, Class B shares would experience higher cumulative
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 service and
distribution fees of Class A shares. Class B investors, however, enjoy the
benefit of permitting all their dollars to work from the time the investments
are 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.
The "Hypothetical Example of Effect of Expenses" under "Prospectus Summary"
shows for each Fund, and on an aggregate basis for the High Income Fund and the
Portfolio, the cumulative expenses an investor would pay over time on a
hypothetical investment in Class A or Class B shares of each Fund, assuming an
annual return of 5%.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more 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.
Prospectus Page 10
<PAGE>
GT GLOBAL INCOME FUNDS
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund is waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in a Fund. Investors eligible for
complete initial sales charge waivers should purchase Class A shares. The
contingent deferred sales charge is waived for certain redemptions of Class B
shares. 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 GT 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 a Fund.
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 the Class A and Class B shares of each
Fund and "Dividends, Other Distributions and Federal Income Taxation" and
"Calculation of Net Asset Value" for other differences between these two
classes.
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 1,000
employees; (b) any account with assets of at least $25,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
.50% charged on the assets in the account; (c) any account with assets of at
least $25,000 if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of .50%
charged on the assets in the account; (d) accounts advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust; and (e) any
of the companies comprising or affiliated with Liechtenstein Global Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
GOVERNMENT INCOME FUND
The Government Income Fund seeks a high level of current income by investing
primarily in high quality debt securities of the U.S. and foreign governments,
their agencies and instrumentalities. The Fund's secondary objectives are
capital appreciation and protection of principal through active management of
its maturity structure and currency exposure. There is no assurance that the
Fund's investment objectives will be achieved.
At least 65% of the Fund's total assets normally are invested in debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. For purposes of this policy, the Fund considers debt
obligations of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank, to be
"government securities."
The Fund invests primarily in high quality government debt securities. "High
quality" debt securities are those rated in the top two ratings categories of
Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings
Services ("S&P") or, if not rated, determined to be of comparable quality by LGT
Asset Management. A description of Moody's and S&P ratings is included in the
Appendix to this Prospectus.
The Fund currently contemplates that it will invest principally in obligations
of the United States, Canada, Japan, the Western European nations, New Zealand
and Australia, as well as in multinational currency units. Under normal market
conditions, the Fund invests in issues of not less than three different
countries; investments in the securities of any one country, other than the
United States, normally represent no more than 40% of the Fund's total assets.
The Fund will not invest in a foreign currency or in securities denominated in a
foreign currency if such currency is not at the time of investment considered by
LGT Asset Management to be fully exchangable into U.S. dollars (or a
multinational currency unit) without legal restriction. The Fund may purchase
securities that are issued by the government or a company or financial
institution of one country but denominated in the currency of another country
(or a multinational currency unit).
Prospectus Page 11
<PAGE>
GT GLOBAL INCOME FUNDS
The Fund may invest up to 10% of its total assets in "illiquid securities." The
Fund may also use instruments (including forward currency contracts) often
referred to as "derivatives." See "Options, Futures and Forward Currency
Transactions."
The Fund may also invest up to 35% of its total assets in a combination of: (a)
foreign government securities that are not high quality but are rated at least
"investment grade," i.e., rated within the four highest ratings categories of
Moody's or S&P or, if not rated, determined by LGT Asset Management to be of
comparable quality; (b) corporate debt obligations of U.S. or foreign issuers
rated at least investment grade by Moody's or S&P, including debt obligations
convertible into equity securities or having attached warrants or rights to
purchase equity securities; and (c) common stocks, preferred stocks and warrants
to acquire such securities, provided that the Fund will not invest more than 20%
of its total assets in such securities.
LGT Asset Management allocates the Fund's assets among securities of countries
and in currency denominations where opportunities for meeting the Fund's
investment objectives are expected to be the most attractive. LGT Asset
Management selects securities of particular issuers on the basis of its views as
to the best values then currently available in the marketplace. Such values are
a function of yield, maturity, issue classification and quality characteristics,
coupled with expectations regarding the local and world economies, movements in
the general level and term of interest rates, currency values, political
developments and variations of the supply of funds available for investment in
the world bond market relative to the demands placed upon it.
STRATEGIC INCOME FUND
The Strategic Income Fund primarily seeks high current income and secondarily
seeks capital appreciation. There is no assurance that the Fund's investment
objectives will be achieved.
The Strategic Income Fund invests in debt securities of issuers in: (1) the
United States; (2) developed foreign countries; and (3) emerging markets. The
Fund selects debt securities from those issued by governments, their agencies
and instrumentalities; central banks; and commercial banks and other corporate
entities. Debt securities in which the Fund may invest include bonds, notes,
debentures, and other similar instruments. The Fund normally invests at least
50% of its total assets in U.S. and foreign debt and other fixed income
securities that, at the time of purchase, are rated at least investment grade
or, if not rated, determined by LGT Asset Management to be of comparable
quality. No more than 50% of the Fund's total assets may be invested in
securities rated below investment grade. Such securities involve a high degree
of risk and are predominantly speculative. They are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds." The Fund may also invest
in securities that are in default as to payment of principal and/or interest.
See "Risk Factors."
The Fund considers "emerging markets" to consist of all countries determined by
LGT Asset Management to have developing or emerging economies and markets. These
countries generally include every country in the world except the United States,
Canada, Japan, Australia, New Zealand and most countries located in Western
Europe. The Fund will consider investment in the following emerging markets:
<TABLE>
<S> <C>
Algeria Kenya
Argentina Malaysia
Bolivia Mauritius
Botswana Mexico
Brazil Morocco
Bulgaria Nicaragua
Chile Nigeria
China Pakistan
Colombia Panama
Costa Rica Peru
Cyprus Philippines
Czech Republic Poland
Dominican Republic Portugal
Ecuador Republic of Slovakia
Egypt Russia
El Salvador Singapore
Finland South Africa
Ghana South Korea
Greece Sri Lanka
Hong Kong Swaziland
Hungary Taiwan
India Thailand
Indonesia Turkey
Israel Uruguay
Ivory Coast Venezuela
Jamaica Zimbabwe
Jordan
</TABLE>
The Strategic Income Fund will not be invested in all such markets at all times.
Moreover, investing in some of those markets currently may not be desirable or
feasible, due to the lack of adequate custody arrangements for the Strategic
Income Fund's assets, overly burdensome repatriation requirements and similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks or for other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as
Prospectus Page 12
<PAGE>
GT GLOBAL INCOME FUNDS
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenue from either goods produced, sales made or services
performed in emerging markets; or (iii) organized under the laws of, or with a
principal office in, an emerging market.
The Fund's investments in emerging market securities may consist substantially
of Brady Bonds (see "General Policies -- Brady Bonds," below) and other
sovereign debt securities issued by emerging market governments. "Sovereign debt
securities" are those issued by emerging market governments that are traded in
the markets of developed countries or groups of developed countries. LGT Asset
Management may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Fund without regard to ratings.
Currently, the substantial majority of emerging market debt securities are
considered to have a credit quality below investment grade. Because the Fund's
investment in debt securities rated below investment grade is limited to 50% of
the Fund's total assets, the Fund's investment in emerging market debt
securities is therefore limited to 50% of its total assets as well.
The Fund also may consider making carefully selected investments in
below-investment grade debt securities of corporate issuers in the United States
and in developed foreign countries, subject to the overall 50% limitation. See
"Risk Factors" for a more complete description of the risks associated with
investment in emerging market and other lower quality debt securities. The Fund
also may invest in bank loan participations and assignments, which are fixed and
floating rate loans arranged through private negotiations between foreign
entities. See "General Policies -- Loan Participations and Assignments" below.
The Fund may invest up to 15% of its net assets in illiquid securities. The Fund
may also use instruments (including forward currency contracts) often referred
to as "derivatives." See "General Policies -- Options, Futures, and Forward
Currency Transactions."
HIGH INCOME FUND
The High Income Fund primarily seeks high current income, and secondarily seeks
capital appreciation. The Fund seeks its objectives by investing all of its
investable assets in the Global High Income Portfolio, which in turn seeks the
same objectives as the Fund by normally investing at least 65% of its total
assets in debt securities of issuers in emerging markets. There is no assurance
that the Portfolio's or the Fund's investment objectives will be achieved.
The Portfolio intends to invest in the following types of debt securities:
bonds, notes and debentures of emerging market governments; securities issued or
guaranteed by such governments' agencies or instrumentalities; securities issued
or guaranteed by the central banks of emerging market countries; and securities
issued by other banks and companies in such countries and securities denominated
in or indexed to the currencies of emerging markets. Under current market
conditions, the Portfolio expects its investments in emerging market securities
to consist substantially of Brady Bonds (see "General Policies -- Brady Bonds,"
below) and other sovereign debt securities.
Under normal circumstances, the Portfolio may invest up to 35% of its total
assets in a combination of (i) equity securities of issuers in emerging markets
included in the list above under the caption "Strategic Income Fund"; (ii)
equity and debt securities of issuers in developed countries, including the
United States; (iii) securities of issuers in emerging markets not included in
the list of emerging markets above, if investing therein becomes feasible and
desirable subsequent to the date of this Prospectus; and (iv) cash and money
market instruments. In evaluating investments in securities of issuers in
developed markets, LGT Asset Management will consider, among other things, the
business activities of the issuer in emerging markets and the impact that
developments in emerging markets are likely to have on the issuer's financial
condition.
The Portfolio considers "emerging markets" to consist of all countries
determined by LGT Asset Management to have developing or emerging economies and
markets. These countries generally include every country in the world except the
United States, Canada, Japan, Australia, New Zealand and most countries in
Western Europe. The Portfolio will consider investment in the emerging markets
listed above under "Strategic Income Fund." The Portfolio will not be invested
in all such markets at all times. Moreover, investing in some of those markets
currently may not be desirable or feasible, due to the lack of adequate custody
arrangements for the Portfolio's assets, overly burdensome repatriation
requirements and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus and Statement of Additional Information, an issuer in
an emerging market is an entity: (i) for which the principal securities trading
is an emerging market, as defined
Prospectus Page 13
<PAGE>
GT GLOBAL INCOME FUNDS
above; (ii) that (alone or on a consolidated basis) derives 50% or more of its
total revenue from either goods produced, sales made or services performed in
emerging markets; or (iii) organized under the laws of, or with a principal
office in, an emerging market.
Under normal circumstances, substantially all of the Portfolio's assets will be
invested in debt securities of both governmental and corporate issuers in
emerging markets. Emerging markets debt securities generally are considered to
have a credit quality below investment grade, as defined above. Lower quality
securities involve a high degree of risk and are predominantly speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." See "Risk Factors." Many emerging market debt
securities are not rated by U.S. ratings agencies such as Moody's and S&P. The
Portfolio's ability to achieve its investment objectives is thus more dependent
on LGT Asset Management's credit analysis. The Portfolio may invest in
securities that are in default as to payment of principal and/or interest.
The Portfolio may invest in bank loan participations and assignments, which are
fixed and floating rate loans arranged through private negotiations between
foreign entities. See "General Policies -- Loan Participations and Assignments"
below. The Portfolio may invest up to 15% of its net assets in illiquid
securities. The Portfolio may also use instruments (including forward currency
contracts) often referred to as "derivatives." See "General Policies -- Options,
Futures, and Forward Currency Transactions."
OTHER INFORMATION REGARDING THE PORTFOLIO. The High Income Fund may withdraw its
investment from the Portfolio at any time, if the Board of Directors of the
Company determines that it is in the best interests of the 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
the Fund in another pooled investment entity having substantially the same
investment objectives as the Fund or the retention by the Fund of its own
investment adviser to manage the Fund's assets in accordance with the investment
objectives, policies and limitations discussed herein with respect to the
Portfolio.
The approval of the High Income Fund and of other investors in the Portfolio, if
any, is not required to change the investment objectives, policies or
limitations of the Portfolio, unless otherwise specified. Written notice shall
be provided to shareholders of the High Income Fund thirty days prior to any
changes in the Portfolio's investment objectives. If the objectives of the
Portfolio change and the shareholders of the High Income Fund do not approve a
parallel change in the Fund's investment objectives, the Fund would seek an
alternative investment vehicle or directly retain its own investment adviser.
As previously described, investors should be aware that the High Income Fund,
unlike mutual funds which directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objectives by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Since the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
In addition to selling its interests to the Fund, the Portfolio may sell its
interests to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
all of its assets in the Portfolio, it would not be required to sell its shares
at the same public offering price as the Fund and may charge different sales
commissions. Therefore, investors in the Fund may experience different returns
from investors in another investment company which invests exclusively in the
Portfolio. As of the date of this Prospectus, the High Income Fund is the only
institutional investor in the Portfolio.
Investors in the Fund should be aware that the Funds' investment in the
Portfolio may be materially affected by the actions of large investors in the
Portfolio, if any. For example, as with all open-end investment companies, if a
large investor were to redeem its interest in the Portfolio, the Portfolio's
remaining investors could experience higher pro rata operating expenses, thereby
producing lower returns. As a result, the Portfolio's security holdings may
become less diverse, resulting in increased risk. Institutional investors in the
Portfolio that have a greater pro rata ownership interest in the Portfolio than
the Fund could have effective voting control over the operation of the
Portfolio. A change in the Portfolio's fundamental objectives, policies and
restrictions, which is not approved by the shareholders of the Fund, could
require the Fund to redeem its interest in the Portfolio. Any such
Prospectus Page 14
<PAGE>
GT GLOBAL INCOME FUNDS
redemption could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the 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 Fund and could
affect adversely the liquidity of the Fund.
See "Management" for a complete description of the management and other expenses
associated with the High Income Fund's investment in the Portfolio. This
Prospectus and the Statement of Additional Information relating to the High
Income Fund and the Portfolio, dated February 29, 1996, contain more detailed
information about the High Income Fund and the Portfolio, including information
related to (i) the investment policies and restrictions of the Fund and the
Portfolio, (ii) the Directors and officers of the Company, the Trustees and
officers of the Portfolio, the administrator of the Fund and the investment
manager and administrator of the Portfolio, (iii) portfolio transactions and
brokerage commissions, (iv) the Fund's shares, including the rights and
liabilities of its shareholders, (v) additional performance information,
including the method used to calculate yield and total return, (vi) the
determination of the value of the shares of the Fund and (vii) the audited
financial statements of Assets and Liabilities of the Fund and the Portfolio at
October 31, 1995, respectively.
GENERAL POLICIES
TEMPORARY DEFENSIVE STRATEGIES. LGT Asset Management may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted
due to market, economic or political conditions. Pursuant to such a defensive
strategy, the Government Income Fund, the Strategic Income Fund and the
Portfolio temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of their respective
assets in high quality debt securities or money market instruments of U.S. or
foreign issuers, and most or all of the Government Income Fund's, the Strategic
Income Fund's or the Portfolio's investments may be made in the United States
and denominated in U.S. dollars. To the extent the Funds or the Portfolio employ
a temporary defensive strategy, they will not be invested so as to achieve
directly their investment objectives.
In addition, pending investment of proceeds from new sales of Fund or Portfolio
shares or to meet ordinary daily cash needs, the Government Income Fund, the
Strategic Income Fund and the Portfolio temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest any portion
of its assets in high quality foreign or domestic money market instruments.
ASSET ALLOCATION. The Government Income Fund, the Strategic Income Fund and the
Portfolio each invests in debt obligations allocated among diverse markets and
denominated in various currencies, including U.S. dollars, or in multinational
currency units such as European Currency Units. The Government Income Fund, the
Strategic Income Fund and the Portfolio may purchase securities that are issued
by the government or a company or financial institution of one country but
denominated in the currency of another country (or a multinational currency
unit). The Funds are designed for investors who wish to accept the risks
entailed in such investments, which are different from those associated with a
portfolio consisting entirely of securities of U.S. issuers denominated in U.S.
dollars. See "Risk Factors."
LGT Asset Management selectively will allocate the assets of the Government
Income Fund, the Strategic Income Fund and the Portfolio in securities of
issuers in countries and in currency denominations where the combination of
fixed income market returns, the price appreciation potential of fixed income
securities and currency exchange rate movements will present opportunities
primarily for high current income and secondarily for capital appreciation (and,
in the case of the Government Income Fund, secondarily for capital appreciation
and protection of principal). In so doing, LGT Asset Management intends to take
full advantage of the different yield, risk and return characteristics that
investment in the fixed income markets of different countries can provide for
U.S. investors. Fundamental economic strength, credit quality and currency and
interest rate trends will be the principal determinants of the emphasis given to
various country, geographic and industry sectors within the Government Income
Fund, the Strategic Income Fund and the Portfolio. Securities held by the
Government Income Fund, the Strategic Income Fund and the Portfolio may be
invested in without limitation as to maturity.
LGT Asset Management generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and
Prospectus Page 15
<PAGE>
GT GLOBAL INCOME FUNDS
trends, growth rate forecasts, balance of payments status and economic policies)
as well as technical and political data. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, if the exchange rate of the foreign currency
declines, the dollar value of the security will decrease. However, the
Government Income Fund, the Strategic Income Fund and the Portfolio each may
seek to protect itself against such negative currency movements through the use
of sophisticated investment techniques. See "Options, Futures and Forward
Currency Transactions" and "Swaps, Caps, Floors and Collars."
BRADY BONDS. The Strategic Income Fund and the Portfolio may invest in "Brady
Bonds," which are debt restructurings that provide for the exchange of cash and
loans for newly issued bonds. Brady Bonds have been issued by the countries of,
among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Jordan, Mexico, Nigeria, Philippines, Poland, Uruguay,
Venezuela and are expected to be issued by Panama, Peru and other emerging
market countries. Approximately $139 billion in principal amount of Brady Bonds
are outstanding, the largest proportion having been issued by Brazil, Argentina
and Mexico. Brady Bonds issued by Brazil, Argentina and Mexico currently are
rated below investment grade. As of the date of this Prospectus, the Strategic
Income Fund and the Portfolio are not aware of the occurrence of any payment
defaults on Brady Bonds. Investors should recognize, however, that Brady Bonds
have been issued only recently and, accordingly, do not have a long payment
history. Brady Bonds may be collateralized or uncollateralized, are issued in
various currencies (primarily the U.S. dollar) and are actively traded in the
secondary market for Latin American debt. The Salomon Brothers Brady Bond Index
provides a benchmark that can be used to compare returns of emerging market
Brady Bonds with returns in other bond markets, e.g., the U.S. bond market.
The Strategic Income Fund and the Portfolio may invest in either collateralized
or uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on such bonds generally are
collateralized by cash or securities in an amount that, in the case of fixed
rate bonds, is equal to at least one year of rolling interest payments or, in
the case of floating rate bonds, initially is equal to at least one year's
rolling interest payments based on the applicable interest rate at that time and
is adjusted at regular intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may invest in fixed and floating rate loans ("Loans") arranged through private
negotiations between a foreign entity and one or more financial institutions
("Lenders"). The majority of the Fund's and the Portfolio's investments in Loans
in emerging markets is expected to be in the form of participations in Loans
("Participations") and assignments of portions of Loans from third parties
("Assignments"). Participations typically will result in the Fund and/or the
Portfolio having a contractual relationship only with the Lender, not with the
borrower government. The Fund and/or the Portfolio will have the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. In connection with purchasing
Participations, the Fund and/or the Portfolio generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the loan ("Loan Agreement"), nor any rights of set-off against the borrower,
and the Fund and/or the Portfolio may not directly benefit from any collateral
supporting the Loan in which it has purchased the Participation. As a result,
the Fund and/or the Portfolio will assume the credit risk of both the borrower
and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
and/or the Portfolio may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. The Fund
and/or the Portfolio will acquire Participations only if the Lender
interpositioned between the Fund and/or the Portfolio and the borrower is
determined by LGT Asset Management to be creditworthy. When the Fund and/or the
Portfolio purchases Assignments from Lenders, the Fund and/or the Portfolio will
acquire direct rights against the borrower on the Loan. However, since
Assignments are arranged through private negotiations between potential
assignees and assignors, the rights and obligations acquired by the Fund and/or
the Portfolio as the purchaser of an Assignment may differ from, and be more
limited than, those held by the assigning Lender.
Prospectus Page 16
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GT GLOBAL INCOME FUNDS
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Government Income Fund, the
Strategic Income Fund and the Portfolio may purchase debt securities on a
"when-issued" basis and may purchase or sell such securities on a "forward
commitment" basis in order to hedge against anticipated changes in interest
rates and prices. The price, which is generally expressed in yield terms, is
fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Funds and the
Portfolio will purchase or sell when-issued securities 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 of
the securities. If a Fund or the Portfolio disposes of the right to acquire a
when-issued security prior to its acquisition or disposes of its right to
deliver or receive against a forward commitment, it may incur a gain or loss. At
the time a Fund or the 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 a Fund or the Portfolio may incur a loss. The Government
Income Fund may invest up to 5% if its total assets in a combination of
securities purchased on a when-issued basis or with respect to which it has
entered into forward commitment agreements.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. From time to
time, it may be advantageous for the Government Income Fund to borrow money
rather than sell existing portfolio positions to meet redemption requests.
Accordingly, the Government Income Fund may borrow from banks or may borrow
through reverse repurchase agreements and "roll" transactions in connection with
meeting requests for the redemption of Fund shares. The Government Income Fund
also may borrow up to 5% of its total assets for temporary or emergency purposes
other than to meet redemptions. However, the Government Income Fund will not
borrow for investment purposes, nor will the Fund purchase securities while
borrowings are outstanding. See "Investment Objectives and Policies" in the
Statement of Additional Information.
Both the Strategic Income Fund and the Portfolio are authorized to borrow money
from banks in an amount up to 33 1/3% of its total assets (including the amount
borrowed), less all liabilities and indebtedness other than the borrowings and
may use the proceeds of such borrowings for investment purposes. The Strategic
Income Fund and the Portfolio will borrow for investment purposes only when LGT
Asset Management believes that such borrowings will benefit the Fund or the
Portfolio, respectively, after taking into account considerations such as the
costs of the borrowing and the likely investment returns on the securities
purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund and the Portfolio creates
the opportunity for increased net income and appreciation but, at the same time,
involves special risk considerations. For example, leveraging might exaggerate
changes in the net asset value of Fund shares and in the yield realized by the
Fund or the Portfolio. Although the principal amount of such borrowings will be
fixed, the Strategic Income Fund's and the Portfolio's assets may change in
value during the time the borrowing is outstanding. By leveraging the Fund or
the Portfolio, changes in net asset values, higher or lower, may be greater in
degree than if leverage was not employed. To the extent the income derived from
the assets obtained with borrowed funds exceeds the interest and other expenses
that the Fund or the Portfolio will have to pay, the Fund's or the Portfolio's
net income will be greater than if borrowing was not used. Conversely, if the
income from the assets obtained with borrowed funds is not sufficient to cover
the cost of borrowing, the net income of the Fund or the Portfolio will be less
than if borrowing were not used, and therefore the amount available for
distribution to shareholders as dividends will be reduced. The Strategic Income
Fund and the Portfolio each expects that some of its borrowings may be made on a
secured basis.
In addition to the foregoing borrowings, the Strategic Income Fund and the
Portfolio each may borrow money for temporary or emergency purposes or payments
in an amount not exceeding 5% of the value of its total assets (not including
the amount borrowed) provided that the total amount borrowed by the Strategic
Income Fund or the Portfolio for any purpose does not exceed 33 1/3% of its
total assets.
Prospectus Page 17
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GT GLOBAL INCOME FUNDS
The Funds and the Portfolio may also enter into reverse repurchase agreements
with a bank or recognized securities dealer, although the Strategic Income Fund
currently has no intention of doing so with respect to more than 5% of its total
assets. Under a reverse repurchase agreement, the Funds or the Portfolio would
sell securities and agree to repurchase them at a particular price at a future
date. At the time a Fund or the Portfolio enters into a reverse repurchase
agreement, it will establish and maintain a segregated account with an approved
custodian containing cash or liquid high grade debt securities having a value
not less than the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by a Fund or the Portfolio may decline below the price
of the securities a Fund or the Portfolio has sold but is obligated to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce a
Fund's or the Portfolio's obligation to repurchase the securities, and a Fund's
or the Portfolio's use of the proceeds of the reverse repurchase agreement may
effectively be restricted pending such decision.
The Strategic Income Fund and the Portfolio also may enter into "dollar rolls,"
in which the Fund or the Portfolio sells fixed income securities for delivery in
the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, the Fund or the Portfolio would forego principal and
interest paid on such securities. The Fund or the Portfolio would be compensated
by the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. See "Investment Objectives and Policies" in the Statement of
Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Strategic Income Fund's or the Portfolio's assets for
purposes of calculating compliance with the Fund's or the Portfolio's borrowing
limitation. See "Investment Limitations" in the Statement of Additional
Information.
SECURITIES LENDING. The Government Income Fund, the Strategic Income Fund and
the Portfolio may to make loans of their respective portfolio securities to
broker/dealers or to other institutional investors. At all times a loan is
outstanding, each Fund and the Portfolio requires the borrower to maintain with
the Fund's or the 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. Each Fund
and the Portfolio will receive any interest paid on the loaned securities and a
fee and/or a portion of the interest earned on the collateral. Income received
in connection with securities lending may be used to offset the Fund's or the
Portfolio's custody fees. Each Fund and the Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in recovery of the loaned
securities and possible loss of rights in the collateral should the borrower
fail financially.
ZERO COUPON SECURITIES. The Strategic Income Fund and the Portfolio may invest
in certain zero coupon securities that are "stripped" U.S. Treasury notes and
bonds. They also may invest in zero coupon and other deep discount securities
issued by foreign governments and domestic and foreign corporations, including
certain Brady Bonds and other foreign debt and in payment-in-kind securities.
Zero coupon securities pay no interest to holders prior to maturity, and
payment-in-kind securities pay interest in the form of additional securities.
However, a portion of the original issue discount on zero coupon securities and
the "interest" on payment-in-kind securities will be included in the investing
Fund's or Portfolio's income. Accordingly, for a Fund to continue to qualify for
tax treatment as a regulated investment company and to avoid a certain excise
tax (see "Taxes" in the Statement of Additional Information), it may be required
to distribute an amount that is greater than the total amount of cash it
actually receives (or, in the case of the High Income Fund, its share of the
total amount of cash the Portfolio actually receives). These distributions must
be made from the Fund's (or, in the case of the High Income Fund, its, or its
share of the Portfolio's) cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund or the Portfolio will not be able to
purchase additional income-producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value
Prospectus Page 18
<PAGE>
GT GLOBAL INCOME FUNDS
and will be subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable maturities that make
current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Government Income Fund, the Strategic Income
Fund and the Portfolio may utilize combinations of futures on bonds and forward
currency contracts to create investment positions that have substantially the
same characteristics as bonds of the same type as those on which the futures
contracts are written. Investment positions of this type are generally referred
to as "synthetic securities."
For example, in order to establish a synthetic security position for a Fund or
the Portfolio that is comparable to owning a Japanese government bond, LGT Asset
Management might purchase futures contracts on Japanese government bonds in the
desired principal amount and purchase forward currency contracts for Japanese
Yen in an amount equal to the then current purchase price for such bonds in the
Japanese cash market, with each contract having approximately the same delivery
date.
LGT Asset Management might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's or the
Portfolio's investment position, or LGT Asset Management might close out those
positions, thus effectively selling the synthetic security. Further, the amount
of each contract might be adjusted in response to market conditions and the
forward currency contract might be changed in amount or eliminated in order to
hedge against currency fluctuations.
Further, while these futures and currency contracts remain open, the Funds and
the Portfolio will comply with applicable Securities and Exchange Commission
guidelines to set aside cash, U.S. government securities or other liquid high
grade debt securities in a segregated account with its custodian in an amount
sufficient to cover its potential obligations under such contracts.
LGT Asset Management would create synthetic security positions for a Fund or the
Portfolio when it believes that it can obtain a better yield or achieve cost
savings in comparison to purchasing actual bonds or when comparable bonds are
not readily available in the market. Synthetic security positions are subject to
the risk that changes in the value of purchased futures contracts may differ
from changes in the value of the bonds that might otherwise have been purchased
in the cash market. Also, while LGT Asset Management believes that the cost of
creating synthetic security positions generally will be materially lower than
the cost of acquiring comparable bonds in the cash market, a Fund or the
Portfolio will incur transaction costs in connection with each purchase of a
futures or forward currency contract. The use of futures contracts and forward
currency contracts to create synthetic security positions also is subject to
substantially the same risks as those that exist when these instruments are used
in connection with hedging strategies. See "Options, Futures and Forward
Currency Transactions" below and "Options, Futures and Currency Strategies" in
the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. In seeking to protect
against currency exchange rate or interest rate changes that are adverse to
their present or prospective positions, the Government Income Fund, the
Strategic Income Fund and the Portfolio may employ certain risk management
practices involving the use of forward currency contracts, options on
securities, options on indices, options on currencies, and futures contracts and
options on futures contracts on U.S. and foreign government securities, indices
of those securities and currencies. The Strategic Income Fund and the Portfolio
also may enter into interest rate, currency and index swaps and purchase or sell
related caps, floors and collars and other derivatives. See "Swaps, Caps, Floors
and Collars" below. 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). The Government Income Fund, the Strategic
Income Fund and the Portfolio may enter into such instruments up to the full
value of their portfolio assets. There can be no assurance that a Fund's or the
Portfolio's risk management practices will succeed. These techniques are
described below and are further detailed in the Statement of Additional
Information.
Only a limited market, if any, currently exists for forward currency contracts
and options and futures instruments relating to currencies of most emerging
markets, to securities denominated in such currencies or to securities of
issuers domiciled or principally engaged in business in such emerging markets.
To the extent that such a market does not exist, LGT Asset Management may not be
able to effectively hedge its investment in such emerging markets.
Prospectus Page 19
<PAGE>
GT GLOBAL INCOME FUNDS
To attempt to hedge against adverse movements in exchange rates between
currencies, the Government Income Fund, the Strategic Income Fund and the
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 Government Income Fund, the Strategic Income Fund
and the Portfolio may enter into forward currency contracts either with respect
to specific transactions or with respect to the respective Fund's or the
Portfolio's portfolio positions. For example, when a Fund or the Portfolio
anticipates making a purchase or sale of a security, it may enter into a forward
currency contract in order to set the rate (either relative to the U.S. dollar
or another currency) at which a currency exchange transaction related to the
purchase or sale will be made. Further, when LGT Asset Management believes that
a particular currency may decline compared to the U.S. dollar or another
currency, a Fund or the Portfolio may enter into a forward contract to sell the
currency LGT Asset Management expects to decline in an amount up to the value of
the portfolio securities held by the Fund or the Portfolio denominated in a
foreign currency.
Each Fund and the 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, each Fund and the Portfolio may purchase and sell put and call
options on securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or the Portfolio or that LGT Asset Managementintends
to include in the Fund's or the Portfolio's portfolio. The Funds and the
Portfolio also may buy and sell put and call options on indices. Such index
options serve to hedge against overall fluctuations in the securities markets or
market sectors generally, rather than anticipated increases or decreases in the
value of a particular security.
Further, the Funds and the Portfolio may sell index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general market or market sector decline that could adversely affect
the Fund's or the Portfolio's portfolio. The Funds and the Portfolio also may
buy index futures contracts and purchase call options or write put options on
such contracts to hedge against a general market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. A Fund or
the Portfolio may use interest rate futures contracts and options thereon to
hedge its portfolio against changes in the general level of interest rates.
In addition, the Government Income Fund, the Strategic Income Fund and the
Portfolio may write and purchase put and call options on securities, currencies
and indices that are traded on recognized securities exchanges and
over-the-counter ("OTC") markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), have the effect of limiting the extent to which the Government
Income Fund, the Strategic Income Fund and the Portfolio may enter into forward
contracts or futures contracts, or engage in options transactions. See "Taxes"
in the Statement of Additional Information.
Although a Fund or the 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 LGT Asset
Management's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which a Fund or the 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 Fund or
the Portfolio to purchase or sell a portfolio security at a time when it would
otherwise be favorable for it to do so, or the possible need for a Fund or the
Portfolio to sell a security at a disadvantageous time, due to the need for the
Fund or the Portfolio to maintain "cover" or to set aside securities in
connection with hedging transactions; and (6) the possible need of a Fund or the
Portfolio 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
Prospectus Page 20
<PAGE>
GT GLOBAL INCOME FUNDS
regulated investment companies under the Code. See "Dividends, Other
Distributions and Federal Income Taxation" herein and "Taxes" in the Statement
of Additional Information. If LGT Asset Management incorrectly forecasts
currency exchange rates or interest rates in utilizing a strategy for a Fund or
the Portfolio, it would be in a better position if it had not hedged at all. A
Fund or the Portfolio also may conduct its foreign currency exchange
transactions on a spot (I.E., cash) basis at the spot rate prevailing in the
foreign currency exchange market.
SWAPS, CAPS, FLOORS AND COLLARS. The Strategic Income Fund and the Portfolio may
enter into interest rate, currency and index swaps, and purchase or sell related
caps, floors and collars and other derivative instruments. The Strategic Income
Fund and the Portfolio expect to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a technique for managing
the portfolio's duration (I.E., the price sensitivity to changes in interest
rates) or to protect against any increase in the price of securities the Fund or
the Portfolio anticipates purchasing at a later date. The Fund and the Portfolio
intend to use these transactions as hedges, and neither will sell interest rate
caps or floors if it does not own securities or other instruments providing an
income stream roughly equivalent to what the Fund or the Portfolio may be
obligated to pay.
Interest rate swaps involve the exchange by the Fund or the Portfolio with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed rate payments) with
respect to a notional amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount based on changes in the values of the
reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
INDEXED COMMERCIAL PAPER. The Strategic Income Fund and the Portfolio may invest
without limitation in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide that
its principal amount is adjusted upwards or downwards (but not below zero) at
maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Strategic Income Fund and the Portfolio will
purchase such commercial paper with the currency in which it is denominated and,
at maturity, will receive interest and principal payments thereon in that
currency, but the amount of principal payable by the issuer at maturity will
change in proportion to the change (if any) in the exchange rate between the two
specified currencies between the date the instrument is issued and the date the
instrument matures. While such commercial paper entails the risk of loss of
principal, the potential for realizing gains as a result of changes in foreign
currency exchange rates enables the Fund and the Portfolio to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund and the Portfolio will not purchase such commercial paper for
speculation. The Fund and the Portfolio will establish a segregated account with
respect to its investments in this type of commercial paper and will maintain in
such account cash, U.S. government securities or liquid, high grade debt
securities having a value equal to the aggregate, outstanding principal amount
of the commercial paper of this type that is held by the Fund and the Portfolio.
OTHER INFORMATION. For the fiscal years ended October 31, 1995 and 1994, the
portfolio turnover rates for the Government Income Fund, the Strategic Income
Fund and the Portfolio were 385% and 625%, 238% and 583%, and 213% and 178%,
respectively. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs that the Funds or the
Portfolio will bear directly and could result in the realization of net capital
gains which would be taxable when distributed to shareholders. See "Dividends,
Other Distributions, and Federal Income Taxation."
Each Fund's investment objectives may not be changed without the approval of a
majority of the respective Fund's outstanding voting securities. As defined in
the Investment Company Act of 1940, as amended ("1940 Act") and as used in this
Prospectus Page 21
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GT GLOBAL INCOME FUNDS
Prospectus, a "majority of the Fund's outstanding voting securities" means the
lesser of (i) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares. In addition, each Fund has adopted certain investment
limitations which also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Each Fund's other investment policies described herein
are not fundamental policies and may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval, provided that any
such policies as so amended do not conflict with that Fund's fundamental
investment limitations.
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RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. Each Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its portfolio positions and its net currency exposure. The
value of fixed income securities held by the Government Income Fund, the
Strategic Income Fund and the Portfolio generally fluctuates inversely with
interest rate movements. Longer term bonds held by the Government Income Fund,
the Strategic Income Fund or the Portfolio are subject to greater interest rate
risk. There is no assurance that any Fund or the Portfolio will achieve its
investment objectives.
According to LGT Asset Management, as of December 31, 1995, over 65% of the
value of all outstanding government debt obligations throughout the world was
represented by obligations denominated in currencies other than the U.S. dollar.
Moreover, from time to time, the debt securities of issuers located outside the
United States have substantially outperformed the debt obligations of U.S.
issuers. Accordingly, LGT Asset Management believes that the Government Income
Fund's and the Strategic Income Fund's policy of investing in debt securities
throughout the world and the Portfolio's policy of investing in debt securities
of issuers in emerging markets may enable the achievement of results superior to
those produced by mutual funds with similar objectives to those of the Funds and
the Portfolio that invest solely in debt securities of U.S. issuers.
Nonetheless, foreign investing does entail certain risks. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies. The securities of non-U.S. issuers generally are not
registered with the SEC, nor are the issuers thereof usually subject to the
SEC's reporting requirements. Accordingly, there may be less publicly available
information about foreign securities and issuers than is available with respect
to U.S. securities and issuers. The Government Income and Strategic Income
Funds' and the Portfolio's net investment income from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing their 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 Government Income Fund, the Strategic Income Fund and the
Portfolio, political or social instability, or diplomatic developments which
could affect the investments of the Government Income Fund, the Strategic Income
Fund and the Portfolio 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.
Each Fund and the Portfolio is classified under the 1940 Act as a
"non-diversified" fund; therefore, the Government Income Fund, the Strategic
Income Fund, the High Income Fund (through its investment in the Portfolio) and
the Portfolio each will be able, with respect to 50% of their total assets, to
invest more than 5% of their total assets in obligations of one issuer. Because
each Fund and the Portfolio is permitted to invest a greater proportion of its
assets in the securities of a smaller number of issuers, the value of each
Fund's shares may fluctuate more widely and the Funds and the Portfolio may be
subject to greater investment and credit
Prospectus Page 22
<PAGE>
GT GLOBAL INCOME FUNDS
risk with respect to their portfolios than mutual funds which are required to be
more broadly diversified.
CURRENCY RISK. Since the Government Income Fund, the Strategic Income Fund and
the Portfolio normally invest substantially in securities denominated in
currencies other than the U.S. dollar, and because they may hold foreign
currencies, they will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Funds and gains and losses realized by the Funds. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
RISKS ASSOCIATED WITH INVESTMENT IN EMERGING MARKETS. Because of the special
risks associated with investing in emerging markets, an investment in the
Strategic Income Fund and the Portfolio should be considered speculative.
Investors are strongly advised to consider carefully the special risks involved
in emerging markets, which are in addition to the usual risks of investing in
developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Strategic Income Fund or the Portfolio could lose its
entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Strategic Income Fund or the Portfolio to make intended
securities purchases due to settlement problems could cause the Strategic Income
Fund or the Portfolio to forego attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Strategic Income Fund or the Portfolio due to subsequent
declines in value of the portfolio security or, if the Strategic Income Fund or
the Portfolio has entered into a contract to sell the security, could result in
possible liability to the purchaser.
Prospectus Page 23
<PAGE>
GT GLOBAL INCOME FUNDS
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Strategic Income Fund's or the
Portfolio's portfolio securities in such markets may not be readily available.
Section 22(e) of the 1940 Act permits a registered investment company to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Strategic Income Fund or the
Portfolio believes that appropriate circumstances warrant, it will promptly
apply to the SEC for a determination that an emergency exists within the meaning
of Section 22(e) of the 1940 Act. During the period commencing from the
Strategic Income Fund's or the Portfolio's identification of such conditions
until the date of SEC action, the portfolio securities of the Strategic Income
Fund or the Portfolio in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Company's Board of
Directors or the Portfolio's Board of Trustees.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may have difficulty disposing of Assignments and Participations. The liquidity
of such securities is limited and, the Fund and the Portfolio anticipate that
such securities could be sold only to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Fund's and the Portfolio's ability to
dispose of particular Assignments or Participations when necessary to meet the
Fund's and/or the Portfolio's liquidity needs or in response to a specific
economic event, such as a deterioration in the creditworthiness of the borrower.
The lack of a liquid secondary market for Assignments and Participations also
may make it more difficult for the Fund and/or the Portfolio to assign a value
to those securities for purposes of valuing the Fund's or the Portfolio's
portfolio and calculating its net asset value.
SOVEREIGN DEBT. The Strategic Income Fund and the Portfolio may invest in
sovereign debt securities of emerging market governments, including Brady Bonds.
Investments in such securities involve special risks. The issuer of the debt or
the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in accordance with
the terms of such debt. Periods of economic uncertainty may result in the
volatility of market prices of sovereign debt obligations and in turn a Fund's
net asset value, to a greater extent than the volatility inherent in domestic
fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's or the
Portfolio's investments. Emerging markets are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their sovereign debt. Although LGT Asset Management intends to manage the
Strategic Income Fund and the Portfolio in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Fund or the Portfolio to suffer a loss of interest or
principal on any of its holdings.
Prospectus Page 24
<PAGE>
GT GLOBAL INCOME FUNDS
In recent years, some of the emerging market countries in which the Strategic
Income Fund and the Portfolio expect to invest have encountered difficulties in
servicing their sovereign debt obligations. Some of these countries have
withheld payments of interest and/or principal of sovereign debt. These
difficulties have also led to agreements to restructure external debt
obligations -- in particular, commercial bank loans, typically by rescheduling
principal payments, reducing interest rates and extending new credits to finance
interest payments on existing debt. In the future, holders of emerging market
sovereign debt securities may be requested to participate in similar
rescheduling of such debt. Certain emerging market countries are among the
largest debtors to commercial banks and foreign governments. Currently, Brazil,
Mexico and Argentina are the largest debtors among developing countries. At
times certain emerging market countries have declared moratoria on the payment
of principal and interest on external debt; such a moratorium is currently in
effect in certain emerging market countries. There is no bankruptcy proceeding
by which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Strategic Income Fund and the Portfolio may invest involve great risk. As
noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Strategic Income Fund and the Portfolio may have difficulty disposing of and
valuing certain sovereign debt obligations because there may be a limited
trading market for such securities. Because there is no liquid secondary market
for many of these securities, the Strategic Income Fund and the Portfolio
anticipate that such securities could be sold only to a limited number of
dealers or institutional investors.
RISKS ASSOCIATED WITH INVESTMENTS IN LOWER QUALITY DEBT SECURITIES. As discussed
above, it is expected that under normal market conditions the Strategic Income
Fund may invest up to 50% of its total assets in debt securities rated below
investment grade, and substantially all the Portfolio's assets will be so
invested. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or 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 for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest quality 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. Lower quality debt securities are also generally considered
to be subject to greater risk than higher quality securities with regard to a
deterioration of general economic conditions. These securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds." As
noted above, the Strategic Income Fund and the Portfolio may invest in debt
securities rated below C, which are in default as to principal and/ or interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not
Prospectus Page 25
<PAGE>
GT GLOBAL INCOME FUNDS
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
quality in response to subsequent events, so that an issuer's current financial
condition may be better or worse than a rating indicates. See "Appendix" 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 may be subordinated to the claims of 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 Strategic Income Fund or the Portfolio. If an issuer exercises
these provisions in a declining interest rate market, the Strategic Income Fund
or the Portfolio may have to replace the security with a lower yielding
security, resulting in a decreased return for investors. In addition, the
Strategic Income Fund and the Portfolio may have difficulty disposing of lower
quality securities because there may be a thin trading market for such
securities. There may be no established retail secondary market for many of
these securities, and the Strategic Income Fund and the Portfolio anticipate
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 Strategic Income Fund and the Portfolio to obtain accurate
market quotations for purposes of valuing the securities in the portfolios of
the Strategic Income Fund and the Portfolio. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may also decrease the
values and liquidity of lower quality securities, especially in a thinly traded
market. The Strategic Income Fund and the Portfolio also may acquire lower
quality debt securities during an initial underwriting or may acquire lower
quality debt securities which are sold without registration under applicable
securities laws. Such securities involve special considerations and risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Strategic Income Fund and the Portfolio
will adversely impact net asset value of the Strategic Income Fund and the High
Income Fund. See "Risk Factors" in the Statement of Additional Information. In
addition to the foregoing, such factors may 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 Strategic Income Fund and the Portfolio each also may 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 Fund and the
Portfolio may have limited legal recourse in the event of a default. Debt
securities issued by governments in emerging markets can differ from debt
obligations issued by private entities in that remedies from defaults generally
must be pursued in the courts of the defaulting government, and legal recourse
is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
As of October 31, 1995, the Strategic Income Fund and the Portfolio had 70.7%
and 37.7%, respectively, of their total net assets in debt securities that
received a rating from Moody's and 26.2% and 56.3%, respectively, of their total
net assets in debt securities that were not so rated. In addition, the Strategic
Income Fund and the Portfolio had
Prospectus Page 26
<PAGE>
GT GLOBAL INCOME FUNDS
3.1% and 6.0%, respectively, of their total net assets in cash and cash items.
The Strategic Income Fund had the following percentages of its total net assets
invested in rated securities: Aaa -- 35.4%, Aa -- 9.6%, A -- 9.4%, Baa -- 0.7%,
Ba -- 10.0%, B -- 5.6%, Caa -- 0%, Ca -- 0%, C -- 0%. Included under the unrated
category are securities comprising 26.2% of the Strategic Income Fund's total
net assets which, while unrated, have been determined by LGT Asset Management to
be of comparable quality to securities in the following rating categories: Baa
(4.2%); Ba (1.6%); and B (20.4%). The Portfolio had the following percentages of
its total net assets invested in rated securities: Aaa -- 0%, Aa -- 0%, A --
3.7%, Baa -- 3.4 %, Ba -- 18.7%, B -- 11.9%, Caa -- 0%, Ca -- 0%, C -- 0%.
Included under the unrated category are securities comprising 56.3% of the
Portfolio's total net assets which, while unrated, have been determined by LGT
Asset Management to be of comparable quality to securities in the following
rating categories: Baa (11.3%); Ba (5.2%); and B (39.8%). It should be noted
that the allocation of the investments of the Strategic Income Fund and the
Portfolio by rating on any given date will vary and should not be considered
representative of the future portfolio composition of the Strategic Income Fund
or the Portfolio.
LGT Asset Management 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
objectives and policies of the Funds and the Portfolio and consider their
ability to assume the investment risks involved before making an investment in
either of those Funds.
- --------------------------------------------------------------------------------
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Each of the Funds is authorized to issue three classes of shares. Class
A shares of the Funds are sold to investors subject to an initial sales charge,
while Class B shares of the Funds 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, is offered through a separate prospectus only to certain
investors. 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 Code Section 403(b)(7) and
other tax-qualified employer-sponsored retirement accounts, if made under a
systematic investment plan providing for monthly or quarterly payments of at
least that amount), and the minimum for additional purchases is $100 (with a $25
minimum 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 "Purchasing Class A Shares" and "Purchasing Class B
Shares" below. The Funds and GT Global reserve the right to reject any purchase
order.
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF A FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY A
CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000 OR
MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT 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
Prospectus Page 27
<PAGE>
GT GLOBAL INCOME FUNDS
will be received prior to such time. After an initial investment is made and a
shareholder account is established through a broker/dealer, at the investor's
option, subsequent purchases may be made directly through GT Global. See
"Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT 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 GT Global or directly through GT Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, the Fund's distributor by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Account Application indicating the
class of shares together with a check to cover the purchase in accordance with
the instructions provided in the Shareholder Account Manual. Purchases will be
executed at the public offering price next determined after the Transfer Agent
has received the Account Application and check. Subsequent investments do not
need to be accompanied by such an application.
Investors also may purchase shares of the Funds through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Funds. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Funds. The Transfer Agent
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing a Fund's shares will not be issued unless an investor submits a
written request to the Transfer Agent, or unless the investor's broker requests
that the Transfer Agent provide certificates. Shares of a Fund are recorded on a
register by the Transfer Agent, and shareholders who do not elect to receive
certificates have the same rights of ownership as if certificates had been
issued to them. Redemptions and exchanges by shareholders who hold certificates
may take longer to effect than similar transactions involving non-certificated
shares because the physical delivery and processing of properly executed
certificates is required. ACCORDINGLY, THE FUNDS AND GT GLOBAL RECOMMEND THAT
SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares 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
AMOUNT OF DEALER
PURCHASE ------------------------------ REALLOWANCE AS
AT THE PUBLIC OFFERING NET PERCENTAGE 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>
- ------------------
* GT Global will pay the following commissions to brokers that initiate and
are responsible for purchases by any single purchaser of Class A shares of
$500,000 or more in the aggregate: 1.00% of the purchase amount up to $3
million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker 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 purchase
equalling at least $500,000 will be subject to a contingent deferred sales
charge for the first year 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.
Prospectus Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge on Class A shares or may pay out additional amounts to
broker/dealers who sell Class A shares. In some instances, GT Global may offer
these reallowances or additional payments only to broker/dealers that have sold
or may sell significant amounts of Class A shares. To the extent that GT Global
reallows the full amount of the sales charge to broker/dealers, such
broker/dealers may be deemed to be underwriters under the Securities Act of
1933, as amended. Commissions also may be paid to broker/ dealers and other
financial institutions that initiate purchases of at least $500,000 made
pursuant to sales charge waivers (i) and (vii), described below under "Sales
Charge Waivers -- Class A Shares."
The following 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 plans under Code Section 403(b) or 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 plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 100 but less than 1,000
employees.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which LGT Asset Management serves as investment manager and/or
administrator; employees or retired employees of the companies comprising of
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver 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 GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global
Prospectus Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
Mutual Funds, the proceeds of which are reinvested in Fund 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 GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October, 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker 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
brokers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Funds at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of the other GT Global Mutual Funds
(other than GT Global Dollar Fund) plus (c) the price of all shares of GT Global
Mutual Funds (other than shares of GT Global Dollar Fund not acquired by
exchange) already held by the investor. To receive the Right of Accumulation, at
the time of purchase investors must give their brokers, the Transfer Agent or GT
Global sufficient information to permit confirmation of qualification. THE
FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUND (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Funds and the Class A shares of other GT Global Mutual Funds (other than
GT Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI WILL APPLY ONLY TO CLASS A SHARES OF THE FUNDS AND
SHARES OF ANY GT GLOBAL MUTUAL FUND THAT OFFERS A SINGLE CLASS OF SHARES (OTHER
THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without a sales charge. Purchases of Class A
shares of two or more GT
Prospectus Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
Global Mutual Funds (other than the GT Global Dollar Fund) may be combined for
this purpose, and the right of accumulation also applies to such purchases. If a
shareholder within one year 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 one year 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 GT Global Mutual Fund (other than GT Global Dollar Fund)
without the imposition of a contingent deferred sales charge, although the
contingent deferred sales charge described above will apply to the redemption of
the shares acquired through an exchange. 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 GT Global. The waivers
set forth under "Contingent Deferred Sales Charge Waivers" apply to redemptions
of Class A shares upon which a contingent deferred sales charge would otherwise
be imposed.
PURCHASING CLASS B SHARES
The public offering price of the Class B shares of each Fund is the next
determined net asset value per share. See "Calculation of Net Asset Value." No
initial sales charge is imposed. A contingent deferred sales charge, however, is
imposed on certain redemptions of Class B shares. 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 a Fund 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 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 THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable 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 $335.00 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 a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after
Prospectus Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
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 realized on the redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED
SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for exchanges, as described
below, and for redemptions in connection with each 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 GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(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, and (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 GT Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code (other than tax-free rollovers or transfers of
asset) 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 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 GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more (or $25 for IRAs,
Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from a Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT 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
GT Global 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
GT Global Mutual Funds. Dollar cost averaging does not assure a
Prospectus Page 32
<PAGE>
GT GLOBAL INCOME FUNDS
profit and does not protect against loss in declining markets. Because such a
program involves continuous investment in securities regardless of fluctuating
price levels of such securities, investors should consider their financial
ability to continue purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the GT Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. For more
information about the GT Global Dollar Cost Averaging Program, investors should
consult their brokers or GT Global.
- --------------------------------------------------------------------------------
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of each Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges, provided that the registration remains identical. This exchange
privilege is available only in those jurisdictions where the sale of GT Global
Mutual Fund shares to be acquired may be legally made. CLASS A SHARES MAY BE
EXCHANGED FOR CLASS A SHARES OF OTHER GT GLOBAL MUTUAL FUNDS. CLASS B SHARES MAY
BE EXCHANGED ONLY FOR CLASS B SHARES OF OTHER GT 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 MAY 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 -- Taxes." In addition to the Funds, the GT Global Mutual Funds
currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL AMERICA GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL DOLLAR FUND
- --------------
* Formerly G.T. Latin America Growth Fund.
Up to four exchanges each year per Fund may be made without charge. A $7.50
service charge will be imposed on each subsequent exchange. If a shareholder
does not surrender all of his or her shares in an exchange, the remaining
balance in the shareholder'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.
A shareholder 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 GT
Global Mutual Fund(s) being considered. Certain brokers may charge a fee for
handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's broker/ dealer or to the Transfer Agent by telephone at the
appropriate toll free number provided in the Shareholder Account Manual.
Exchange orders will be accepted by telephone provided that the exchange
involves only uncertificated shares on
Prospectus Page 33
<PAGE>
GT GLOBAL INCOME FUNDS
deposit in the shareholder's account or for which certificates have previously
been deposited. Shareholders automatically have telephone privileges to
authorize exchanges. The Funds, GT Global and the Transfer Agent will not be
liable for any loss or damage for acting in good faith upon instructions
received by telephone and reasonably believed to be genuine. The Funds employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, including requiring some form of personal identification prior to
acting upon instructions received by telephone, providing written confirmation
of such transactions, and/or tape recording of telephone instructions.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the 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 a Fund's or GT Global's
refusal to accept further purchase and exchange orders from the shareholder 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.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
As described below, shares of each Fund 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 that 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 a Fund, the Class A shares will be redeemed first unless
the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
that sell shares of a Fund 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 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 or, in
limited circumstances, Class A shares). Redemption requests received before the
close of regular trading on the NYSE on any Business Day will be effected at the
net asset value calculated on that day. Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a
Prospectus Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
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 a Fund's 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 FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
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 GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their 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 of the
Fund may be disadvantageous to investors because of the sales charges involved
and possible tax implications, and therefore is discouraged. In addition,
shareholders who participate in the Systematic Withdrawal Plan should not elect
to reinvest dividends or other distributions in additional Fund shares.
CHECKWRITING -- GOVERNMENT INCOME FUND -- CLASS A SHARES. Class A shareholders
of Government Income Fund may redeem their Government Income Fund shares by
writing checks, a supply of which may be obtained through the Transfer Agent,
against their Government Income Fund accounts. The minimum check amount is $300.
When the check is presented to the Transfer Agent for payment, the Transfer
Agent will cause the Government Income Fund to redeem a sufficient number of
Class A shares to cover the amount of the check. This procedure enables the
shareholder to continue receiving dividends on those shares until such time as
the check is presented to the Transfer Agent for payment. Cancelled checks are
not returned. However, such shareholders may
Prospectus Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
obtain photocopies of their cancelled checks upon request. If a shareholder does
not own sufficient Class A shares to cover a check, the check will be returned
to the payee marked "nonsufficient funds." Checks written in amounts less than
$300 also will be returned. The Government Income Fund and the Transfer Agent
reserve the right to terminate or modify the checkwriting service at any time or
to impose a service charge in connection with it.
Because the aggregate amount of Government Income Fund Class A shares owned by a
shareholder is likely to change each day, shareholders should not attempt to
redeem all of their Government Income Fund shares held in their accounts by
using the check redemption procedure. Charges may be imposed for specially
imprinted checks, business checks, copies of cancelled checks, stop payment
orders, checks returned "nonsufficient funds" and checks returned because they
are written for less than $300. These charges will be paid by redeeming
automatically an appropriate number of Government Income Fund Class A shares.
Shareholders of Government Income Fund Class A shares who are interested in
checkwriting should obtain the necessary forms by calling the Transfer Agent at
the number provided in the Shareholder Account Manual. Checkwriting generally is
not available to persons who hold Government Income Fund Class A shares in tax-
deferred retirement plan accounts.
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 a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check it can take up to 10 business days
to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
A Fund may redeem the shares of any shareholder whose account is reduced to less
than $500 in net asset value through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase his or her holdings to an aggregate amount of $500 or more (with a
minimum purchase of $100).
Prospectus Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their brokers. Shareholders also may place such orders directly through
the Transfer Agent in accordance with this Manual. See "How to Invest;" "How to
Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other Distributions,
and Federal Income Taxation -- Taxes" for more information.
Each Fund's Transfer Agent is GT 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:
GT 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 GT 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: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global at 1-800-223-2138.
Prospectus Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Funds calculate net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m., Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the High Income Fund is the value of its
investment in the Portfolio) subtracting all of its 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.
Long-term debt obligations held by a Fund or the Portfolio 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 LGT Asset Management 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. Equity securities are valued at
the last sale price on the exchange or in the OTC market in which such
securities are primarily traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. When market quotations for futures and options positions held by a Fund
or the Portfolio are readily available, those positions are valued based upon
such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolio's Board of
Trustees. Securities and other assets quoted in foreign currencies are valued in
U.S. dollars based on the prevailing exchange rates on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC dealer markets which may trade on days when the NYSE is
closed (such as Saturday). As a result, the net asset values 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. The per share
net asset value of the Advisor Class shares of a Fund generally will be higher
than that of the Class A and Class B shares of that Fund because of the lower
expenses borne by the Advisor Class shares. It is expected, however, that the
net asset value per share of the classes of a Fund 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.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund pays monthly dividends from its net
investment income, if any, which includes accrued interest, earned discount
(including both original issue and market discounts) and dividends less
applicable expenses. Each Fund also annually distributes 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.
Prospectus Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX STATUS
OF DIVIDENDS AND OTHER DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN
CASH OR REINVESTED IN ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders. The Portfolio expects that it also will not be
liable for any federal income tax.
Dividends from a Fund's investment company taxable income 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
Prospectus Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
whether a proper taxpayer identification number is on file with a Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares of a Fund through a redemption
or exchange within 90 days after purchase and (2) subsequently acquires Class A
shares of the Fund or any other GT Global Mutual Fund on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when the shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if shares of a Fund are purchased within 30 days before or after
redeeming other shares of that Fund (regardless of class) at a loss, all or a
part of the loss will not be deductible and instead will increase the basis of
the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors are therefore urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolio,
respectively, and have approved contracts with various financial organizations
to provide, among other things, day to day management services required by the
Funds and the Portfolio. See "Directors, Trustees, and Executive Officers" in
the Statement of Additional Information for a complete description of the
Directors of each of the Funds and the Trustees of the Portfolio. A majority of
the disinterested members of the Board of Directors of the Company and the Board
of Trustees of the Portfolio have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest up to and including
creating a separate Board of Trustees for the Portfolio.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as the Government Income Fund's, the Strategic Income Fund's and the
Portfolio's investment manager and administrator include, but are not limited
to, determining the composition of the investment portfolio of the Government
Income Fund, the Strategic Income Fund and the Portfolio and placing orders to
buy, sell or hold particular securities. In addition, LGT Asset Management
provides the following administration services to the Funds and the Portfolio:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Government
Income Fund's, the Strategic Income Fund's and the Portfolio's operation.
The Government Income Fund and the Strategic Income Fund each pays LGT Asset
Management administration fees computed daily and payable monthly, based on
their respective average daily net assets, for such services at the annualized
rate of .725% on the first $500 million, .70% on the next $1 billion, .675% on
the next $1 billion, and .65% on amounts thereafter. The High Income Fund pays
administration fees, directly to LGT Asset Management at the 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
the Portfolio to LGT Asset Management. The Portfolio pays such fees, based on
the average daily net assets of the Portfolio, directly to LGT Asset Management
at the annualized rate of .475% on the first $500 million, .45% on the next $1
billion, .425% on the next $1 billion and .40% on amounts thereafter, plus 2% of
the Portfolio's total investment income as stated in the Portfolio's
Prospectus Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
Statement of Operations, calculated in accordance with generally accepted
accounting principles, adjusted daily for currency revaluations, on a marked to
market basis, of the Portfolio's assets; provided, however, that during any
fiscal year this amount shall not exceed 2% of the Portfolio's total investment
income calculated in accordance with generally accepted accounting principles.
These rates are higher than those paid by most mutual funds. Each Fund pays all
expenses not assumed by LGT Asset Management, GT Global or any other agents. LGT
Asset Management and GT Global have undertaken to limit the expenses of the
Class A and Class B shares of the Government Income Fund and the Strategic
Income Fund (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the maximum annual level of 1.85% and 2.50% of the
average daily net assets of such Funds' Class A and Class B shares,
respectively. LGT Asset Management and GT Global have undertaken to limit the
expenses of the Class A and Class B shares of the High Income Fund (and such
Fund's pro-rata portion of the Portfolio's expenses) to the maximum annual level
of 2.20% and 2.85% of the average daily net assets of such Fund's Class A and
Class B shares, respectively.
LGT Asset Management also serves as each Fund's pricing and accounting agent.
The monthly fee for these services to LGT Asset Management is a percentage, not
to exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional clients. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consist of
GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
Prospectus Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
The investment professionals primarily responsible for the portfolio management
of the Government Income Fund, the Strategic Income Fund and the Portfolio are
as follows:
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Robert F. Allen Portfolio Manager since Portfolio Manager for LGT Asset Management since 1989.
San Francisco 1989
STRATEGIC INCOME FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Portfolio Manager and Economist for LGT Asset Management since
San Francisco 1992 1992. From 1991 to 1992, Mr. Nocera was Senior Vice President and
Director for Global Fixed Income Research at The Putnam Companies;
Prior thereto, he was a Financial Economist at the International
Monetary Fund.
Nikos G. Pappayliou Portfolio Manager since Trader -- Global Fixed Income Investments for LGT Asset Management
San Francisco 1994 from 1993 to 1994. From 1991 to 1992, Mr. Pappayliou was European
Fixed Income Arbitrageur for Swiss Bank (London). Prior thereto,
he was Fixed Income Arbitrageur for Credit Lyonnais (Paris).
HIGH INCOME PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Portfolio Manager and Economist for LGT Asset Management since
San Francisco Portfolio inception in 1992. From 1991 to 1992, Mr. Nocera was Senior Vice President and
1992 Director for Global Fixed Income Research at The Putnam Companies;
Prior thereto, Mr. Nocera was a Financial Economist at the
International Monetary Fund.
</TABLE>
In placing orders for the Government Income Fund's, Strategic Income Fund's and
the Portfolio's securities transactions, LGT Asset Management seeks to obtain
the best net results. LGT Asset Management has no agreement or commitment to
place orders with any broker/dealer. Commissions or discounts in foreign
securities exchanges and 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 governmental 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 the best net
results, LGT Asset Management may consider a broker/dealer's sale of shares of
the GT Global Mutual Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions for the Fund may be
executed through any Liechtenstein Global Trust affiliate.
Prospectus Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of each Fund's Class A and Class B shares. Like LGT Asset
Management, GT Global is a subsidiary of Liechtenstein Global Trust with offices
at 50 California Street, 27th Floor, San Francisco, California 94111. As
distributor, GT 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. GT 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, GT Global pays a commission equal to 4.00% of the amount invested to
broker/dealers who sell Class B shares. A commission with respect to Class B
shares is not paid on exchanges or certain investments in Class B shares.
GT Global, at its own expense, may provide additional promotional incentives to
brokers that sell shares of the Funds and/or shares of the other GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to brokers that have sold or may sell significant
amounts of shares during specified periods of time. Such compensation and
incentives may include, but are not limited to, cash, merchandise, trips and
financial assistance to brokers in connection with preapproved conferences or
seminars, sales or training programs for invited sales personnel, payment for
travel expenses (including meals and lodging) incurred by sales personnel and
members of their families or other invited guests to various locations for such
seminars or training programs, seminars for the public, advertising and sales
campaigns regarding one or more of the GT Global Mutual Funds, and/or other
events sponsored by the broker. In addition, GT Global makes ongoing payments to
brokerage firms, financial institutions (including banks) and others that
facilitate the administration and servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of 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 GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to each Fund's
Class B shares ("Class B Plan"), each Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred by GT Global in excess of 1.00% annually may be carried forward for
reimbursement in subsequent years as long as that Plan continues in effect.
GT Global's service and distribution expenses covered by the Plans include the
payment of commissions; the cost of any additional compensation paid by GT
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 GT 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, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. 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 43
<PAGE>
GT GLOBAL INCOME 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, a
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to a Fund's
Automatic 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 a semiannual report, respectively. These
reports list the securities held by the Fund and include the Fund's financial
statements. Under certain circumstances, duplicate mailings of such reports to
the same household may be consolidated. In addition, the federal income status
of distributions made by the Fund to shareholders are reported after the end of
each calendar year on Form 1099-DIV.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
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 the Fund's shareholders individually when the matter affects the
specific interest of the 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 all
the Company's funds will be voted in the aggregate on all other matters, such as
the election of Directors and ratification of the Board of Directors' selection
of the Company's independent accountants.
Normally there will be no annual meeting of shareholders of the Company in any
year, except as required under the 1940 Act. The Company would be required to
hold a shareholders' meeting in the event that at any time less than a majority
of the Directors holding office had been elected by shareholders. Directors
shall continue to hold office until their successors are elected and have
qualified. Shares of the Company's funds do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the election
of Directors can elect all the Directors. A Director may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting 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, 300 million shares have been classified as shares of the
Strategic Income Fund and the High Income Fund; 100 million shares of each Fund
have been classified as Class A and Class B shares, respectively. In addition,
500 million shares have been classified as shares of Government Income Fund; 200
million shares have each been classified as Class A and Class B shares,
respectively. Moreover, 100 million shares have been classified as Advisor Class
shares of each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of a Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of a 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 PORTFOLIO. The Portfolio is organized as a trust under the
laws of the state of New York. The Portfolio's Declaration of Trust
Prospectus Page 44
<PAGE>
GT GLOBAL INCOME FUNDS
provides that the High Income Fund and other entities investing in the 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 the Portfolio. However, the Directors of the Company believe that
the risk of the High Income Fund incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance existed
and the Portfolio itself was unable to meet its obligations, and that neither
the High Income Fund nor its shareholders will be exposed to a material risk of
liability by reason of the High Income Fund's investing in the Portfolio. Any
information received from the Portfolio in the Portfolio shareholder report will
be provided to the High Income Fund's shareholders.
Whenever the High Income Fund is requested to vote on any proposal of the
Portfolio, the High Income Fund will hold a meeting of Fund shareholders and
will cast its vote as instructed by Fund shareholders. Because Portfolio
investors' votes are proportionate to their percentage interests in the
Portfolio, one or more other Portfolio investors could, in certain instances,
approve an action against which a majority of the outstanding voting securities
of the Fund had voted. This could result in the Fund's redeeming its investment
in the Portfolio, which could result in increased expenses for the High Income
Fund. Shares for which no voting instructions are received will be voted in the
same proportion as the shares for which voting instructions are received. Any
information received from the Portfolio in the Portfolio's report to
shareholders will be provided to shareholders of the High Income Fund.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their 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. Investors should be aware that as of October 22, 1992,
the investment objectives of the Strategic Income Fund were changed from
long-term high capital appreciation, primarily and moderate income, secondarily,
to primarily high current income and secondarily capital appreciation. In
addition, the investment policies and limitations of the Strategic Income Fund
were modified.
In such materials, each Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date as established by the
Board of Directors.
In addition, in order to more completely represent each Fund's performance or
more accurately compare such performance to other measures of investment return,
each Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
Each Fund also may refer in advertising and promotional materials to its yield,
which will fluctuate over time. A Fund's yield shows the rate of income that it
earns on its investments, expressed as a percentage of the public offering price
of its shares. A Fund calculates yield by determining the interest income it
earned from its portfolio investments for a specified thirty-day period (net of
expenses), dividing such income by the average number of shares outstanding, and
expressing the result as an annualized percentage based on the public offering
price at the end of that thirty-day period. Yield accounting methods differ from
the methods used
Prospectus Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
for other accounting purposes. Accordingly, a Fund's yield may not equal the
dividend income actually paid to investors or the income reported in its
financial statements. Yield is calculated separately for Class A and Class B
shares of each Fund.
Each Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. A Fund's investment results will
vary from time to time depending upon market conditions, the composition of its
portfolio and its operating expenses. These factors and possible differences in
calculation methods should be considered when comparing a Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. Each Fund's results also should be considered
relative to the risks associated with its investment objectives and policies.
See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global, a
subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek,
California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of each Fund's and the Portfolio's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company, the Funds and
the Portfolio. Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset
Management, GT Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's and the Portfolio's
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 each Fund and the Portfolio, assist in the preparation of each Fund's and the
Portfolio's federal and state income tax returns and consult with the Company,
each Fund and the Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 46
<PAGE>
GT GLOBAL INCOME FUNDS
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the 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 exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear somewhat
larger.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa -- Medium-grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- 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 that are not rated as a
matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
Prospectus Page 47
<PAGE>
GT GLOBAL INCOME FUNDS
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the Company ranks in the lower end of its generic
rating category.
STANDARD & POOR'S RATINGS SERVICES ("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 -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
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 which 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" 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. The "D" rating also will be
used upon 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
categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper having a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the
Prospectus Page 48
<PAGE>
GT GLOBAL INCOME FUNDS
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
ability for repayment of senior short-term debt obligations. This normally will
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from
"A1" for the highest quality obligations to "D" for the lowest. Issues in the
"A" category are delineated with numbers 1, 2, and 3 to indicate the relative
degree of safety. A-1 -- This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus sign (+)
designation. A-2 -- Capacity for timely payments on issues with this designation
is satisfactory; however, the relative degree of safety is not as high as for
issues designated "A-1."
Prospectus Page 49
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 50
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 51
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 52
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 53
<PAGE>
<TABLE>
<S> <C> <C>
[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR
MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION
/ / NEW ACCOUNT
/ / ACCOUNT REVISION (Account No.:
---------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ / Class B Shares (Not available for purchases of $500,000 or more or for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000
Transfer Agent of the GT Global Mutual Funds, to may be wired or mailed to a Pre-Designated Account
honor any telephone, telex or telegraphic at your bank. (Wiring instructions may be obtained
instructions reasonably believed to be authentic from your bank.) A bank wire service fee may be
for redemption and/or exchange between a similar charged.
class of shares of any of the Funds distributed
by GT Global, Inc. --------------------------------------------------
Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS
/ / I have completed and attached the --------------------------------------------------
Supplemental Application for: Bank Address
/ / AUTOMATIC INVESTMENT PLAN
/ / SYSTEMATIC WITHDRAWAL PLAN --------------------------------------------------
OTHER Bank A.B.A Number Account Number
/ / I/We owned shares of one or more Funds
distributed by GT Global, Inc. as of April --------------------------------------------------
30, 1987 and since that date continuously Names(s) in which Bank Account is Established
have owned shares of such Funds. Attached is A corporation (or partnership) must also submit a
a schedule showing the numbers of each of "Corporate Resolution"
my/our Shareholder Accounts. (or "Certificate of Partnership") indicating the
names and titles of Officers authorized to act on
its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER G.T. FUND ACCOUNTS:
<TABLE>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
</TABLE>
Account Numbers Account Registrations
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
------------------------------------------------------------------------------
Investment Dealer Name
------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's
Name
( )
------------------------------------------------------------------------------
Branch Address Telephone
X
------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
<PAGE>
<TABLE>
<S> <C> <C>
[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 SUPPLEMENTAL APPLICATION
San Francisco, CA SPECIAL INVESTMENT AND
94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
[LOGO]
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C> <C>
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT
an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee
requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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 LGT ASSET MANAGEMENT, INC., G.T.
INVESTMENT FUNDS, INC., GT GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL
STRATEGIC INCOME FUND, GT GLOBAL HIGH INCOME FUND, GLOBAL HIGH INCOME
PORTFOLIO, OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
INCPR602065MC
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
GT GLOBAL GROWTH & INCOME FUND ("FUND") is a mutual fund, organized as a
non-diversified series of G.T. Investment Funds, Inc., which seeks long-term
capital appreciation together with current income. The Fund invests in a global
portfolio of both equity and debt securities, in such relative proportions as
deemed most appropriate by the Fund's investment manager in view of then-current
economic and market conditions. There can be no assurance that the Fund will
achieve its investment objective.
The Fund's investment manager, LGT Asset Management, Inc. ("LGT Asset
Management") and its worldwide affiliates are part of Liechtenstein Global
Trust, a provider of global asset management and private banking products and
services to individual and institutional investors.
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission ("SEC") and is incorporated herein
by reference. The Statement of Additional Information which may be amended or
supplemented from time to time, is available without charge by writing to the
Fund at 50 California Street, San Francisco, California 94111, or by calling
(800) 824-1580.
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.
An investment in the GT Global Growth & Income Fund 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 GT Global
Mutual Funds
/ / Reduced Sales Charge Plans
/ / Dollar Cost Averaging Program
/ / Automatic Investment Plan
/ / Systematic Withdrawal Plan
FOR FURTHER INFORMATION, CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL GROWTH & INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Alternative Purchase Plan................................................................. 7
Investment Objective and Policies......................................................... 8
How To Invest............................................................................. 12
How To Make Exchanges..................................................................... 19
How To Redeem Shares...................................................................... 20
Shareholder Account Manual................................................................ 22
Calculation of Net Asset Value............................................................ 23
Dividends, Other Distributions and Federal Income Taxation................................ 23
Management................................................................................ 25
Other Information......................................................................... 28
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
Investment Objective: The Fund seeks long-term capital appreciation together with current income
Principal Investments: Invests principally in blue-chip equity securities and high
quality government bonds of issuers located in the United States
and throughout the world
Investment Manager: LGT Asset Management is part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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 0.35% of the
average daily net assets of the 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 1.00% of the average
daily net assets of the Class B shares
Shares Available Through: Most brokerage firms nationwide or directly through the Fund's
distributor
Exchange Privileges: Shares of a class of the Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds, which are open-end management investment companies
advised and/or administered by LGT Asset Management
Dividends and Other Dividends paid quarterly from net investment income and realized
Distributions: net short-term capital gains; other distributions paid annually
from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans)
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans)
Net Asset Value: Class A and Class B shares are 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 3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comrising Liechtenstein Global Trust are indirect subsidiaries of the Prince of
Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVE AND POLICIES. The Fund seeks its objective of long-term
capital appreciation together with current income by investing in a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets. The Fund currently expects to choose its investments
principally from issuers in the United States, Canada, Japan, the Western
European nations, New Zealand and Australia. See "Investment Objective and
Policies." Consistent with the Fund's investment objective, LGT Asset Management
employs a conservative investment style in managing the Fund's assets, in order
to attempt to limit volatility and risk to capital.
The Fund seeks its investment objective by normally investing at least 65% of
its total assets in a combination of blue-chip equity securities and high
quality government bonds. The remainder of the Fund's assets may be invested in
other equity securities and investment grade government and corporate debt
securities which LGT Asset Management believes will assist the Fund in achieving
its objective. The relative proportions of equity and debt securities held by
the Fund at any one time will vary, depending upon LGT Asset Management's
assessment of global political and economic conditions and the relative
strengths and weaknesses of the world equity and debt markets. To enable the
Fund to respond to economic and market changes, the Fund is authorized to invest
up to 100% of its assets in either equity or debt securities.
INVESTMENT TECHNIQUES AND RISK FACTORS. The Fund 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. The Fund's participation in the currency, options and
futures markets involves certain risks and transaction costs.
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 Fund's net asset value, earnings and
gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than securities of
comparable U.S. companies.
There is no assurance that the Fund will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions. The value of the debt securities held by the
Fund generally fluctuates inversely with interest rate movements. Certain
investment grade debt securities may possess speculative qualities.
PURCHASES AND REDEMPTIONS. Shares of the Fund's common stock are available
through broker/dealers that have entered into agreements to sell shares with the
Fund's distributor, GT Global, Inc. ("GT Global"). Shares also may be acquired
directly through GT Global or through exchanges for shares of the other GT
Global Mutual Funds. See "How to Invest" and "Shareholder Account Manual."
Shares may be redeemed through the Fund's transfer agent, GT Global Investor
Services, Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder
Account Manual."
Prospectus Page 4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following tables+*:
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS: TRIANGLE
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum contingent deferred sales charge........................................................... None 5.0%
Redemption charges................................................................................. None None
Exchange Fees:
-- On first four exchanges each year............................................................. None None
-- On each additional exchange................................................................... $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management
and administration fees.......................................................................... 0.97% 0.97%
12b-1 distribution and service fees................................................................ 0.35% 1.00%
Other expenses..................................................................................... 0.42% 0.42%
----------- -----------
Total Fund Operating Expenses........................................................................ 1.74% 2.39%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES*:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS
----- ----------- -----
<S> <C> <C> <C>
Class A Shares (1)....................................................................... $ 64 $ 100 $ 139
Class B Shares:
Assuming a complete redemption at end of period (2).................................. $ 74 $ 105 $ 152
Assuming no redemption............................................................... $ 24 $ 75 $ 132
<CAPTION>
TEN YEARS
-----
<S> <C>
Class A Shares (1)....................................................................... $ 256
Class B Shares:
Assuming a complete redemption at end of period (2).................................. $ 301
Assuming no redemption............................................................... $ 301
<FN>
- ------------------
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable contingent deferred sales charge.
+ The Fund offers 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 Advisor
Class shares are estimated to approximate 1.39%.
* THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Expenses are
based on the Fund's fiscal year ended October 31, 1995. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. ("NASD") rules regarding investment companies. "Other
expenses" include custody, transfer agent, legal, audit and other expenses.
See "Management" herein and the Statement of Additional Information for
more information. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A
REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above tables and the assumption in
the example of a 5% annual return are required by regulation of the
Securities and Exchange Commission applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's
projected or actual performance.
TRIANGLE 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."
</TABLE>
Prospectus Page 5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed 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, 1995, and each of the
preceding five reporting periods have been audited by Coopers & Lybrand L.L.P.,
independent accountants, whose report thereon also is included in the Statement
of Additional Information.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPTEMBER 25, 1990
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
------------------------------------------------------ OPERATIONS) TO
1995 1994 1993(A) 1992 1991 OCTOBER 31, 1990
-------- -------- -------- ------- ------- ------------------
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77 $ 4.76
-------- -------- -------- ------- ------- -------
Income from investment operations:......
Net investment income................... 0.24 0.22 0.24* 0.21* 0.27* 0.01*
Net realized and unrealized gain (loss)
on investments......................... 0.13 (0.03) 1.05 0.10 0.47 --
-------- -------- -------- ------- ------- -------
Net increase (decrease) from investment
operations............................. 0.37 0.19 1.29 0.31 0.74 0.01
-------- -------- -------- ------- ------- -------
Distributions:
Net investment income................. (0.22) (0.21) (0.24) (0.14) (0.26) --
Net realized gain on investments...... (0.01) (0.06) -- (0.14) -- --
Sources other than net income......... -- -- (0.04) -- -- --
-------- -------- -------- ------- ------- -------
Total distributions................. (0.23) (0.27) (0.28) (0.28) (0.26) --
-------- -------- -------- ------- ------- -------
Net asset value, end of period.......... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
-------- -------- -------- ------- ------- -------
-------- -------- -------- ------- ------- -------
Total investment return (e)............. 6.27% 3.14% 25.1% 5.9% 15.68% 0.2%(b)
-------- -------- -------- ------- ------- -------
-------- -------- -------- ------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $284,069 $317,847 $251,428 $27,754 $71,376 $9,486
Ratio of net investment income to
average net
assets................................. 3.85% 3.30% 3.3%* 4.1%* 5.0%* 2.9%*(c)
Ratio of expenses to average net assets:
With expense reductions................. 1.70% 1.67% 1.8%* 1.9%* 1.9%* 0.6%*(c)
Without expense reductions.............. 1.74% --%(f) --%(f) --%(f) --%(f) --%(f)
Portfolio turnover rate+++.............. 83% 117% 24% 53% 46% none
<CAPTION>
CLASS B++
----------------------------------------------
<S> <C><C> <C> <C> <C>
OCTOBER 22,
YEAR ENDED OCTOBER 31, 1992 TO
------------------------------ OCTOBER 31,
1995 1994 1993(A) 1992(A)
-------- -------- -------- -----------
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 6.21 $ 6.29 $ 5.28 $ 5.29
-------- -------- -------- -----------
Income from investment operations:......
Net investment income................... 0.20 0.18 0.20 0.01
Net realized and unrealized gain (loss)
on investments......................... 0.13 (0.03) 1.05 (0.02)
-------- -------- -------- -----------
Net increase (decrease) from investment
operations............................. 0.33 0.15 1.25 (0.01)
-------- -------- -------- -----------
Distributions:
Net investment income................. (0.18) (0.17) (0.20) --
Net realized gain on investments...... (0.01) (0.06) -- --
Sources other than net income......... -- -- (0.04) --
-------- -------- -------- -----------
Total distributions................. (0.19) (0.23) (0.24) --
-------- -------- -------- -----------
Net asset value, end of period.......... $ 6.35 $ 6.21 $ 6.29 $ 5.28
-------- -------- -------- -----------
-------- -------- -------- -----------
Total investment return (e)............. 5.57% 2.48% 24.3% (0.2)%(b)
-------- -------- -------- -----------
-------- -------- -------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $356,796 $359,242 $150,768 $ 280
Ratio of net investment income to
average net
assets................................. 3.20% 2.65% 2.6% N/A(d)
Ratio of expenses to average net assets:
With expense reductions................. 2.35% 2.32% 2.5%* N/A(d)
Without expense reductions.............. 2.39% --%(f) --%(f) --%(d)(f)
Portfolio turnover rate+++.............. 83% 117% 24% 53%
<FN>
- --------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992 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 LGT Asset Management, Inc. of Fund operating
expenses of $0.005, $0.02, $0.03 and $0.01 for the years ended October 31,
1993, 1992, 1991 and for the period from September 25, 1990 to October 31,
1990, respectively. Without such reimbursements, the expense ratios would
have been 1.93%, 2.20%, 2.46% and 2.40% and the net investment income to
average net assets would have been 3.20%, 3.70%, 4.40% and 1.04% for the
years ended October 31, 1993, 1992, 1991 and for the period from September
25, 1990 to October 31, 1990, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the year.
(b) Not annualized.
(c) Annualized.
(d) Ratios not meaningful due to short period of operation of Class B shares.
(e) Total investment return does not include sales charges.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary distinction between the two classes
of the 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 the Fund represent interests in the same 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
Exchange Shares." Each class has distinct advantages and disadvantages for
different investors, and investors should choose the class that better suits
their circumstances and objectives.
CLASS A SHARES. 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.
Purchases of $500,000 or more must be for Class A shares. Class A shares of the
Fund also bear annual service and distribution fees of up to 0.35% of the
average daily net assets of that class.
CLASS B SHARES. Class B shares 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 the 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 Class B shareholders 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. The higher service and distribution fees paid by the
Class B shares of the Fund should cause that class to have a higher expense
ratio and to pay lower per share dividends than Class A shares of the Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class 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 will approximate or exceed
the expense of the applicable 4.75% maximum initial sales charge plus the 0.35%
service and distribution fees on the Class A shares. 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 seven years after purchase.
Thereafter, Class B shares would experience higher cumulative expenses.
Investors who expect to maintain their investment in the 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 the investments are 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 the annual service and distribution fees
applicable to the Class A shares.
The "Hypothetical Example of Effect of Expenses" under "Prospectus Summary"
shows for the Fund the cumulative expenses an investor would pay over time on a
hypothetical investment in Class A and Class B shares of the Fund, assuming an
annual return of 5%.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under the 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
the Fund is waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in the Fund. Investors eligible for
complete initial sales charge waivers should purchase Class A shares. The
contingent deferred sales charge is waived for certain redemptions of Class B
Prospectus Page 7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
shares. 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 GT 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 Fund.
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 the Fund
and "Dividends, Other Distributions and Federal Income Taxation," and
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares are 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 1,000
employees; (b) any account with assets of at least $25,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
at least .50% on the assets in the account; (c) any account with assets of at
least $25,000 if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account; (d) accounts advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust; and (e) any
of the companies comprising or affiliated with Liechtenstein Global Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation together with
current income. The Fund seeks its objective by investing in a global portfolio
of both equity and debt securities, allocated among diverse international
markets. See "Investment Objective and Policies -- Risk Factors." There is no
assurance that the Fund's investment objective will be achieved.
Consistent with the Fund's investment objective, LGT Asset Management employs a
conservative investment style in managing the Fund's assets. In so doing LGT
Asset Management attempts to limit volatility and risk to capital.
At least 65% of the Fund's total assets normally will be invested in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; AND (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are deemed
to be high quality if at the time of the Fund's investment they are rated within
one of the two highest ratings categories of Moody's Investors Service, Inc.
("Moody's") or by Standard and Poor's Ratings Services ("S&P") or, if not rated,
are deemed to be of equivalent quality in the judgment of LGT Asset Management.
Up to 35% of the Fund's total assets may be invested in other equity securities
and investment grade government and corporate debt obligations which LGT Asset
Management believes will assist the Fund in achieving its objective. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories of Moody's or S&P, or, if not rated, deemed to be of
equivalent quality in the judgment of LGT Asset Management.
The equity securities in which the Fund may invest include common stocks,
preferred stocks and warrants to acquire such stocks and other equity
securities. Government bonds that the Fund may purchase include debt obligations
issued or guaranteed by the United States or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. Such government securities also may include debt obligations
of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank. The debt
obligations held by the Fund may include debt obligations convertible into
equity securities or having attached warrants or rights to purchase equity
securities.
The Fund currently contemplates that it will invest principally in securities of
issuers in the United States, Canada, Japan, the Western European nations, New
Zealand and Australia. The Fund may invest substantially in securities
denominated in
Prospectus Page 8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
one or more currencies. Under normal conditions, the Fund invests in issuers of
not less than three different countries and issuers of any one country, other
than the United States, will represent no more than 40% of the Fund's total
assets. The Fund may purchase securities that are issued by the government or a
corporation or financial institution of one nation but denominated in the
currency of another nation (or a multinational currency unit).
According to LGT Asset Management, as of December 31, 1995, approximately 67% of
the total equity market capitalization worldwide was represented by non-U.S.
equity securities, and as of December 31, 1995, more than 65% of the value of
all outstanding government debt obligations throughout the world was represented
by obligations denominated in currencies other than the U.S. dollar. Moreover,
from time to time the equity and debt securities of issuers located outside the
United States have substantially outperformed the equity and debt securities of
U.S. issuers. Accordingly, LGT Asset Management believes that the Fund's policy
of investing in equity and debt securities of issuers throughout the world may
enable the achievement of results superior to those produced by mutual funds
with similar objectives to that of the Fund that invest solely in U.S. equity
and debt securities.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. LGT Asset Management allocates
the Fund's assets among securities of countries and in currency denominations
where opportunities for meeting the Fund's investment objective are expected to
be the most attractive. The relative proportions of equity and debt securities
held by the Fund at any one time will vary, depending upon LGT Asset
Management's assessment of global political and economic conditions and the
relative strengths and weaknesses of the world equity and debt markets. To
enable the Fund to respond to general economic changes and market conditions
around the world, the Fund is authorized to invest up to 100% of its total
assets in either equity securities or debt securities.
LGT Asset Management attempts to identify those countries and industries where
economic and political factors are likely to produce above-average growth rates
and to further identify companies in such countries and industries that are best
positioned and managed to benefit from these factors. In evaluating possible
equity investments, LGT Asset Management attempts to identify and acquire only
securities it deems to represent high or improving investment quality.
Securities representing high investment quality generally will include those of
well-known, established and successful issuers that LGT Asset Management
believes will continue to be successful in the future. Securities representing
improving investment quality may include those of an issuer which, for instance,
has improved its sales or earnings or of an issuer the balance sheet and
financial condition of which is improving. LGT Asset Management seeks to avoid
investing in equity securities that appear overly speculative or risky, even if
they have attractive features or investment potential.
In evaluating debt securities considered for the Fund, LGT Asset Management
analyzes their yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding local and world economies,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. LGT
Asset Management may increase the average maturity of the portion of the Fund's
portfolio invested in debt securities when it expects interest rates to decline,
and may decrease such maturity when it expects interest rates to rise. There are
no limitations on the maximum or minimum maturities of the debt securities
considered by the Fund or on the average weighted maturity of the debt portion
of the Fund's portfolio.
Should the rating of any debt security be revised while such security is owned
by the Fund, LGT Asset Management will evaluate what action, if any, is
appropriate with respect to such security. A description of the Moody's and S&P
ratings is included in the "Appendix" to the Statement of Additional
Information.
LGT Asset Management generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation and interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, if the exchange rate of the foreign currency
declines, the dollar value of the security will decrease. However, the Fund may
seek to protect itself against such negative currency movements by engaging in
hedging techniques through the use of options, futures and forward currency
contracts. These instruments are often referred to as "derivatives". See
"Options, Futures and Forward Currency Transactions."
OTHER POLICIES. The Fund may invest up to 10% of its net assets in illiquid
securities and other securities for which no readily available market exists,
and up to 5% of its total assets in a combination of securities purchased on a
when-issued basis or with respect to which it has entered into forward
commitment agreements.
TEMPORARY DEFENSIVE STRATEGIES. The Fund retains the flexibility to respond
promptly to changes in market and economic conditions. Accordingly, in
Prospectus Page 9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
the interest of preserving shareholders' capital, LGT Asset Management may
employ a temporary defensive investment strategy if it determines such a
strategy to be warranted due to market conditions. Under a defensive strategy,
the Fund may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and/or invest any portion or all of its assets in high quality
money market instruments of U.S. or foreign government or corporate issuers, and
most or all of the Fund's investments may be made in the United States and
denominated in U.S. dollars. To the extent the Fund adopts a temporary defensive
posture, it will not be invested so as to directly achieve its investment
objective. In addition, pending investment of proceeds from new sales of Fund
shares or in order to meet ordinary daily cash needs, the Fund 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 the Fund 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
relating to any of the foregoing.
BORROWING AND SECURITIES LENDING. From time to time, it may be advantageous for
the Fund to borrow money rather than sell existing portfolio positions to meet
redemption requests. Accordingly, the Fund may borrow from banks or may borrow
through reverse repurchase agreements and "roll" transactions in connection with
meeting requests for the redemption of Fund shares. The Fund also may borrow up
to 5% of its total assets for temporary or emergency purposes other than to meet
redemptions. However, the Fund will not borrow for leverage purposes nor will
the Fund purchase securities while borrowings in excess of 5% of the Fund's
total assets are outstanding. See "Investment Objective and Policies" in the
Statement of Additional Information.
The Fund is authorized to make loans of its portfolio securities to
broker/dealers or to other institutional investors. The borrower must maintain
with the Fund's custodian collateral consisting of cash, U.S. government
securities or other liquid, high grade debt securities equal to at least 100% of
the value of the borrowed securities, plus any accrued interest. The Fund will
receive any interest paid on the loaned securities and a fee and/or a portion of
the interest earned on the collateral. Income received in connection with
securities lending may be used to offset the Fund's custody fees. The Fund will
limit its loans of portfolio securities to an aggregate of 30% of the value of
its total assets, measured at the time any such loan is made. The risks in
lending portfolio securities, as with other extensions of secured credit,
consist of possible delays in receiving additional collateral or in recovery of
the securities and possible loss of rights in the collateral should the borrower
fail financially.
RISK FACTORS. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions. Equity securities, particularly
common stocks, generally represent the most junior position in an issuer's
capital structure, and entitle holders to an interest in the assets of an
issuer, if any, remaining after all more senior claims have been satisfied. In
addition, the value of debt securities held by the Fund generally will fluctuate
with changes in the perceived creditworthiness of the issuers of such securities
and movements in interest rates. Further, investments in foreign government
securities involve special risks, including the risk that the government issuers
may be unable or unwilling to repay principal and interest when due. Investment
grade debt securities rated Baa by Moody's are described by Moody's as having
speculative characteristics, and therefore may be affected by economic
conditions and changes in the circumstances of their issuers to a greater extent
than higher rated bonds.
The Fund normally will invest in a substantial number of issuers; however, the
Fund has registered under the 1940 Act as a "non-diversified" mutual fund so
that it will be able to invest, with respect to 50% of its assets, more than 5%
of its assets in the securities of a single issuer. Since, as a
"non-diversified" fund, the Fund is permitted to invest a greater proportion of
its assets in the securities of a smaller number of issuers, the value of the
Fund's shares may fluctuate more widely and the Fund may be subject to greater
investment and credit risk with respect to its portfolio than a fund which is
diversified.
FOREIGN INVESTING. 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 Fund's net investment
income from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Fund's 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
Prospectus Page 10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
or other assets of the Fund, political or social instability, or diplomatic or
economic developments which could affect the Fund's 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. LGT Asset Management will
rely on its worldwide financial and investment expertise to attempt to limit
these risks.
Since the Fund may invest substantially in securities denominated in foreign
currencies, and since the Fund may hold foreign currencies, the Fund will be
affected favorably or unfavorably by exchange control regulations or changes in
the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of the Fund's shares, and also
may affect the value of dividends and interest earned by the Fund and gains and
losses realized by the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities; this strategy will be
employed only when, in the opinion of LGT Asset Management, the size of the
premium the Fund receives for writing the option is adequate to compensate the
Fund against the risk that appreciation in the underlying security may not be
fully realized if the option is exercised. The Fund also is authorized to write
put options to attempt to enhance return, although it does not have the current
intention of so doing.
In seeking to protect against currency exchange rate or interest rate changes
that are adverse to its present or prospective positions, the Fund may employ
certain risk management practices involving the use of forward currency
contracts, futures contracts, options on securities, options on currencies,
options on indices and options on futures contracts to attempt to reduce the
overall level of investment risk normally associated with the Fund. 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). The Fund may enter into such instruments up to the full value of
its portfolio assets. There can be no assurance that the Fund's risk management
policies will succeed. These techniques are described below and are detailed
further in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar, or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. For example, when the Fund anticipates making a
purchase or sale of a security, the Fund 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 LGT Asset Management believes that a particular
currency may decline compared to the U.S. dollar or another currency, the Fund
may enter into a forward contract to sell the currency LGT Asset Management
expects to decline in an amount approximating the value of some or all of the
Fund's portfolio securities denominated in a foreign currency.
The Fund also may purchase and sell put and call options on currencies to hedge
against movements in exchange rates. Premiums paid for currency options held by
the Fund may not exceed 5% of the Fund's total assets. The Fund may also
purchase and sell currency futures contracts and options on such futures
contracts to hedge the Fund's portfolio against movements in foreign currency
exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that LGT Asset Management intends to include in
the Fund's portfolio. The Fund also may write call and put options and buy put
and call options on stock indices. Such stock index options serve to hedge
against overall fluctuations in the securities markets or in a specific market
sector, rather than anticipated increases or decreases in the value of a
particular security.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may buy index futures contracts and purchase
call options or write put options on such contracts to hedge against a general
market or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. Similarly, the Fund 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, the Fund may write and purchase put and call options on securities,
currencies and indices that are traded on recognized securities exchanges and
over-the-counter ("OTC") markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain
Prospectus Page 11
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
provisions of the Internal Revenue Code of 1986, as amended ("Code"), limit the
extent to which the Fund may enter into forward contracts, futures contracts, or
engage in options transactions. See "Taxes" in the Statement of Additional
Information.
Although the Fund 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 LGT Asset Management's ability to predict
movements in the prices of individual securities, fluctuations in the general
securities markets and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
forward contracts, options, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that the skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) the 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 the Fund to purchase or sell a portfolio security at a time when it
would otherwise be favorable for it to do so, or the possible need for the Fund
to sell a security at a disadvantageous time, due to the need for the Fund to
maintain "cover" or to set aside securities in connection with hedging
transactions; and (6) the possible need to defer closing out certain options,
futures contracts and options thereon and forward currency contracts in order to
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 LGT Asset Management incorrectly forecasts securities market
movements, currency exchange rates or interest rates in utilizing a strategy for
the Fund, the Fund would be in a better position if it had not hedged at all.
The Fund 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.
OTHER INFORMATION. The Fund's investment objective may not be changed without
the approval of a majority of the Fund's outstanding voting securities. As
defined in the 1940 Act and as used in this Prospectus, a "majority of the
Fund's outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations which also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval. The Fund's policies
regarding lending, and the percentage of Fund 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.
- --------------------------------------------------------------------------------
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. The Fund is authorized to issue three classes of shares. Class A shares
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 Fund, the Advisor Class, is
offered through a separate prospectus only to certain investors. 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 Code Section 403(b)(7) and
other tax-qualified employer-sponsored retirement accounts, if made by such
investors under a systematic investment plan providing for monthly or quarterly
payments of at least that amount), and the minimum for additional purchases is
$100 (with a $25 minimum for IRAs, Code Section 403(b)(7) custodial accounts
Prospectus Page 12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 "Purchasing Class A Shares" and "Purchasing
Class B Shares" below. The Fund and GT 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 FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY
A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000
OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Fund may be purchased through
broker/dealers with which GT 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/dealer, at the investor's option, subsequent purchases may be made
directly through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT 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 GT Global or directly through GT Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, the Fund's distributor, by completing and
signing an Account Application accompanying 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 Fund through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the 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.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing the Fund's 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 Fund are recorded on
a register by the Transfer Agent, and shareholders who do not elect to receive
certificates have the same rights of ownership as if certificates had been
issued to them. Redemptions and exchanges by shareholders who hold certificates
may take longer to effect than similar transactions involving non-certificated
shares because the physical delivery and processing of properly executed
certificates is required. ACCORDINGLY, THE FUND AND GT GLOBAL RECOMMEND THAT
SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
The Fund's public offering price for Class A shares is equal to the net asset
value per share (see "Calculation of Net Asset Value") including any sales
charge determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
REALLOWANCE AS
AMOUNT OF PURCHASE ------------------------------ PERCENTAGE OF
AT THE PUBLIC OFFERING NET THE OFFERING
OFFERING PRICE PRICE INVESTMENT PRICE
- ----------------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Less than
$50,000.............. 4.75% 4.99% 4.25%
$50,000 but less than
$100,000............. 4.00% 4.17% 3.50%
$100,000 but less than
$250,000............. 3.00% 3.09% 2.75%
$250,000 but
less than
$500,000............. 2.00% 2.04% 1.75%
$500,000 or more....... 0.00% 0.00% *
</TABLE>
- --------------------
* GT Global will pay the following commissions to brokers that initiate and
are responsible for purchases by any single purchaser of Class A shares of
$500,000 or more in the aggregate: 1.00% of the purchase amount up to $3
million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker 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.
Prospectus Page 13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 year 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, GT 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, GT Global may offer these reallowances or
additional payments only to broker/dealers that have sold or may sell
significant amounts of Class A shares. To the extent that GT Global reallows the
full amount of the sales charge to broker/dealers, such broker/dealers may be
deemed to be underwriters under the Securities Act of 1933, as amended.
Commissions also may be paid to broker/dealers and other financial institutions
that initiate purchases made pursuant to sales charge waivers (i) and (vii),
described below under "Sales Charge Waivers -- Class A Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years. 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, 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 plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above;
and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 100 but less than 1,000
employees.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which LGT Asset Management serves as investment manager and/or
administrator; employees or retired employees of the companies comprising
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver 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 GT Global.
Prospectus Page 14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund 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 GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October, 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in the
Fund have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker 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 of the Fund 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 brokers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the 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 GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global Mutual
Funds (other than shares of GT Global Dollar Fund not acquired by exchange)
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their brokers, the Transfer Agent or GT Global
sufficient information to permit confirmation of qualification. THE FOREGOING
RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUND AND OTHER GT
GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Fund and the Class A shares of other GT Global Mutual Funds (other than
GT Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUND AND
OTHER GT
Prospectus Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without a sales charge. Purchases of Class A
shares of two or more GT Global Mutual Funds (other than the GT Global Dollar
Fund) may be combined for this purpose, and the right of accumulation also
applies to such purchases. If a shareholder within one year 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 one year 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 GT Global Mutual Fund (other than GT
Global Dollar Fund) without the imposition of a contingent deferred sales
charge, although the contingent deferred sales charge described above will apply
to the redemption of the shares acquired through an exchange. The waivers set
forth under "Contingent Deferred Sales Charge Waivers" below apply to
redemptions of Class A shares upon which a contingent deferred sales charge
would otherwise be imposed. For federal income tax purposes, the amount of the
contingent deferred sales charge will reduce the gain or increase the loss, as
the case may be, on the amount realized on redemption. The amount of any
contingent deferred sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
The public offering price of the Class B shares of the Fund is the next
determined net asset value per share. See "Calculation of Net Asset Value." No
initial sales charge is imposed. A contingent deferred sales charge, however, is
imposed on certain redemptions of Class B shares. 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 Fund 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 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 THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- -------------------------------------- -----------------------------
<S> <C>
1st Year Since Purchase............... 5%
2nd Year Since Purchase............... 4%
3rd Year Since Purchase............... 3%
4th Year Since Purchase............... 3%
5th Year Since Purchase............... 2%
6th year Since Purchase............... 1%
Thereafter............................ 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable 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 $335.00 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
Prospectus Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
deferred sales charge calculation would therefore be 30.455 shares times $10.00
per share at a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.
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 the redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED
SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for exchanges, as described
below, and for redemptions in connection with the 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 GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(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 the Fund
within 180 days of a prior redemption; and (6) redemptions pursuant to the
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 GT Global Mutual Funds, which are permitted to be
made without penalty pursuant to the Code (other than tax-free rollovers or
transfers of assets) and the proceeds of which are reinvested in Fund shares;
(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 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 the Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT 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
the Fund's net asset value is relatively low and fewer shares when the 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
Prospectus Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
approach. The GT Global 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 GT 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 when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in the Fund ("Monthly Investment")
after participation in the Program begins. The Monthly Investment must be at
least $1,000. The investor then will make an initial investment of at least
$10,000 in the GT Global Dollar Fund. Thereafter, each month an amount equal to
the specified Monthly Investment automatically will be redeemed from the GT
Global Dollar Fund and invested in Fund shares. A sales charge will be applied
to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. For more information about the GT Global Dollar Cost Averaging Program,
investors should consult their brokers or GT Global.
Prospectus Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of the Fund may be exchanged for shares of any of the other GT Global
Mutual 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 GT
Global Mutual Fund shares to be acquired may be legally made. CLASS A SHARES MAY
BE EXCHANGED FOR CLASS A SHARES OF OTHER GT GLOBAL MUTUAL FUNDS. CLASS B SHARES
MAY BE EXCHANGED ONLY FOR CLASS B SHARES OF OTHER GT 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 MAY 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." In addition to the Fund, the GT Global Mutual Funds currently
include:
-- GT GLOBAL AMERICA GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
- --------------
* Formerly G.T. Latin America 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.
A shareholder interested in making an exchange should write or call his or her
broker or the Transfer Agent to request the prospectus of the other GT Global
Mutual Fund(s) being considered. Certain brokers 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 previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, GT Global and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
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 Fund's or GT 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 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 which 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 Fund, the Class A shares will be redeemed first unless
the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKERS/DEALERS. Shareholders with accounts at
broker/dealers which sell shares of the Fund 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 shares' net asset value
next computed after the broker/dealer receives the request or, as described
below, by forwarding such requests to the Transfer Agent (see "How to Redeem
Shares -- Redemptions Through the Transfer Agent"). Redemption proceeds (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 and any required supporting documentation (less any
applicable contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares). Redemption requests received before the close of
regular trading on the NYSE on any Business Day will be effected at the net
asset value calculated on that day. Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institutions.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning the Fund's 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.
Prospectus Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
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 GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their 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 of the
Fund may be disadvantageous to investors because of the sales charges involved
and possible tax implications, and therefore is discouraged. In addition,
shareholders who participate in the Systematic Withdrawal Plan should not elect
to reinvest dividends or other distributions in additional Fund shares.
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 or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or in writing 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 Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until it has assured itself that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
The Fund 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).
Prospectus Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their brokers. Shareholders also may place such orders directly through
GT Global in accordance with this Manual. See "How to Invest"; "How to Make
Exchanges;" "How to Redeem Shares"; and "Dividends, Other Distributions and
Federal Income Taxation -- Taxes" for more information.
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
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 GT 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: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call GT 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 GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the instructions
but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by determining the value of its
total assets (the securities it holds plus any cash or other assets, including
the interest accrued but not yet received), subtracting all of its liabilities
(including accrued expenses), and dividing the result by the total number of
shares outstanding at such time. Net asset value is determined separately for
each class of the Fund.
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued, or, lacking any
sales, at the last available bid price. Long-term 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 LGT Asset Management 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 the
Fund are readily available, those positions are valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
The Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or over-the-counter dealer markets which trade on days when
the NYSE is closed (such as a Saturday). As a result, the net asset values of
the Fund may be significantly affected by such trading on days when shareholders
cannot purchase or redeem shares of the 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 the 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. The per
share net asset value of the Advisor Class shares of the Fund generally will be
higher than that of the Class A and Class B shares of the Fund because of the
lower expenses borne by the Advisor Class shares. It is expected, however, that
the net asset value per share of Class A and Class B shares of the Fund 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.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund pays quarterly dividends from its
net investment income, if any, which includes dividends, accrued interest and
earned discount (including both original issue and market discounts) less
applicable expenses. The Fund also annually distributes 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. The Fund may make an additional dividend or other
distribution if
Prospectus Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
necessary to avoid a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by the 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 will be lower than the per share income
dividends on Class A shares as a result of the higher service and distribution
fees applicable to Class B shares; and the per share income dividends on both
such classes of shares will be lower than the per share income dividends on the
Advisor Class shares as a result of the absence of any service and distribution
fees applicable to Advisor Class shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE REINVESTED AUTOMATICALLY IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX 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 the 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. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that the Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from the 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 the 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.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
The 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 for 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
Prospectus Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
proper taxpayer identification number is on file with the Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund generally will have similar
tax consequences. However, special tax rules apply when a shareholder (1)
disposes of Class A shares of the Fund through a redemption or exchange within
90 days after purchase and (2) subsequently acquires Class A shares of the Fund
or any other GT Global Mutual Fund on which an initial sales charge normally is
imposed without paying that sales charge due to the reinstatement privilege or
exchange privilege. In these cases, any gain on the disposition of the original
Class A shares will be increased, or loss decreased, by the amount of the sales
charge paid when those shares were acquired, and that amount will increase the
adjusted basis of the shares subsequently acquired. In addition, if Fund shares
are purchased within 30 days before or after redeeming other Fund shares
(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 Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Fund. Pursuant to such responsibility, the Board has approved contracts with
various financial organizations to provide, among other things, day to day
management services required by the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as the Fund's investment manager and administrator include, but are
not limited to, determining the composition of the Fund's portfolio and placing
orders to buy, sell or hold particular securities; furnishing corporate officers
and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays LGT Asset Management investment management and administration
fees, computed daily and paid monthly, based on the 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. This
rate is higher than that paid by most mutual funds. LGT Asset Management and GT
Global have undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate of
1.85% and 2.50% of the average daily net assets of the Fund's Class A and Class
B shares, respectively.
LGT Asset Management also serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global
Prospectus Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
asset management and private banking products and services to individual and
institutional investors. Liechtenstein Global Trust 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. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consist of
GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ----------------------------------- ---------------------------------------- ----------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager since Fund inception Portfolio Manager for LGT Asset
London in 1991 Management since 1991; prior thereto,
Portfolio Manager for LGT Asset
Management PLC (London)
Paul Griffiths Portfolio Manager since 1995 Portfolio Manager for LGT Asset
London Management PLC (London) and LGT Asset
Management since 1994; from 1993 to
1994, Global Bond Fund Manager, Lazard
Investors; from 1991 to 1993, Global
Bond Fund Manager; Sanwa International
PLC; from 1989 to 1991, Account
Officer, Royal Bank of Canada
</TABLE>
In placing securities orders for the Fund's portfolio transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker-dealer. Commissions or
discounts in foreign securities exchanges or OTC markets often are fixed and
generally are higher than those in U.S. securities exchanges or markets. 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, forward currency and options transactions. Consistent with its
obligation to obtain the best net results, LGT Asset Management may consider a
broker/dealer's sale of shares of the GT Global Mutual Funds as a factor in
considering through whom portfolio transactions will be effected. Brokerage
transactions may be executed through any Liechtenstein Global Trust affiliate.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of the Fund's Class A and Class B shares. GT Global is a subsidiary
of Liechtenstein Global Trust with offices at 50 California Street, 27th Floor,
San Francisco, California 94111. As distributor, GT 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 on Class A or Class B shares.
GT 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
Prospectus Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
"How to Invest." In addition, GT Global pays a commission equal to 4.00% of the
amount invested to broker/dealers who sell Class B shares. A commission with
respect to Class B shares is not paid on exchanges or certain reinvestments in
Class B shares.
GT Global, at its own expense, may provide additional promotional incentives to
brokers that sell shares of the Fund and/or shares of the other GT Global Mutual
Funds. In some instances additional compensation or promotional incentives may
be offered to brokers that have sold or may sell significant amounts of shares
during specified periods of time. Such compensation and incentives may include,
but are not limited to, cash, merchandise, trips and financial assistance to
brokers in connection with preapproved conferences or seminars, sales or
training programs for invited sales personnel, payment for travel expenses
(including meals and lodging) incurred by sales personnel and members of their
families or other invited guests to various locations for such seminars or
training programs, seminars for the public, advertising and sales campaigns
regarding one or more of the GT Global Mutual Funds, and/or other events
sponsored by the broker. In addition, GT Global makes ongoing payments to
brokerage firms, financial institutions (including banks) and others that
facilitate the administration and servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to the Fund's Class A
shares ("Class A Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to the Fund's
Class B shares ("Class B Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
GT Global's service and distribution expenses covered by the Plans include the
payment of ongoing commissions; the cost of any additional compensation paid by
GT Global to brokers/dealers; the costs of printing and mailing to prospective
investors prospectuses and other materials relating to the Fund; the costs of
developing, printing, distributing and publishing advertisements and other sales
literature; and allocated costs relating to GT 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, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks may also
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. 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 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, such as an additional investment, a
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to the Fund's
Automatic Investment Plan, Systematic Withdrawal Plan, and automatic dividend
reinvestment program may be provided quarterly. Shortly after the end of the
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 the Fund and include the Fund's financial
statements. Under certain circumstances, duplicate mailings of such reports to
the same household may be consolidated. In addition, the federal income tax
status of distributions made by the Fund to shareholders are reported after the
end of each calendar year on Form 1099-DIV.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
establish other funds, each corresponding to a distinct investment portfolio and
a distinct series of the Company's common stock. Shares of the 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 the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of the Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Company would be required to hold a
shareholders' meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
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 the
Fund; 100 million shares have been classified as Class A shares, 100 million
shares have been classified as Class B shares, and 100 million shares have been
classified as Advisor Class shares. This amount may be increased from time to
time in the discretion of the Board of Directors. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.0001 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and other distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
at the discretion of the Board of Directors. Each Class A, Class B and Advisor
Class share of the Fund is equal as to earnings, assets and voting privileges,
except as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
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 Fund, from time to time, may include information on
its investment
Prospectus Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date as established by the
Board of Directors.
In addition, in order to more completely represent the Fund's performance or
more accurately compare such performance to other measures of investment return,
the Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized return reflects percentage rates of return encompassing all
elements of total return (e.g., income and capital appreciation or
depreciation); it 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 Fund's performance data reflects past performance and is not necessarily
indicative of future results. The Fund's investment results will vary from time
to time depending upon market conditions, the composition of its portfolio and
its operating expenses. These factors and possible differences in calculation
methods should be considered when comparing the Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. The Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
The 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 Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global and a
subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 North California Boulevard, Suite 450, Walnut Creek,
California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of the Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset Management, GT
Global and GT Global Investor Services, Inc. in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and the Fund's 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 Fund, assists in
the preparation of the Fund's federal and state income tax returns and consults
with the Company and the Fund as to matters of accounting, regulatory filings,
and federal and state income taxation.
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 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 31
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 32
<PAGE>
<TABLE>
<S> <C> <C>
[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR
MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION
/ / NEW ACCOUNT
/ / ACCOUNT REVISION (Account No.:
---------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ / Class B Shares (Not available for purchases of $500,000 or more or for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
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Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
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</TABLE>
<PAGE>
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ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000
Transfer Agent of the GT Global Mutual Funds, to may be wired or mailed to a Pre-Designated Account
honor any telephone, telex or telegraphic at your bank. (Wiring instructions may be obtained
instructions reasonably believed to be authentic from your bank.) A bank wire service fee may be
for redemption and/or exchange between a similar charged.
class of shares of any of the Funds distributed
by GT Global, Inc. --------------------------------------------------
Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS
/ / I have completed and attached the --------------------------------------------------
Supplemental Application for: Bank Address
/ / AUTOMATIC INVESTMENT PLAN
/ / SYSTEMATIC WITHDRAWAL PLAN --------------------------------------------------
OTHER Bank A.B.A Number Account Number
/ / I/We owned shares of one or more Funds
distributed by GT Global, Inc. as of April --------------------------------------------------
30, 1987 and since that date continuously Names(s) in which Bank Account is Established
have owned shares of such Funds. Attached is A corporation (or partnership) must also submit a
a schedule showing the numbers of each of "Corporate Resolution"
my/our Shareholder Accounts. (or "Certificate of Partnership") indicating the
names and titles of Officers authorized to act on
its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER G.T. FUND ACCOUNTS:
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------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
</TABLE>
Account Numbers Account Registrations
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
------------------------------------------------------------------------------
Investment Dealer Name
------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's
Name
( )
------------------------------------------------------------------------------
Branch Address Telephone
X
------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
<PAGE>
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[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 SUPPLEMENTAL APPLICATION
San Francisco, CA SPECIAL INVESTMENT AND
94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
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ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
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GT GLOBAL
MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
[LOGO]
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BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C> <C>
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
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SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT
an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee
requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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., GT GLOBAL
GROWTH & INCOME FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
GROPR602035MC
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND ("EMERGING MARKETS FUND") seeks long-term growth
of capital by investing primarily in equity securities of companies in emerging
markets.
GT GLOBAL LATIN AMERICA GROWTH FUND ("LATIN AMERICA GROWTH FUND") seeks capital
appreciation by investing primarily in securities of a broad range of Latin
American issuers, including common stock and other equity securities, as well as
debt securities. Each Fund is hereinafter referred to individually as a "Fund"
and together as the "Funds."
The Emerging Markets Fund and Latin America Growth Fund are mutual funds managed
by LGT Asset Management, Inc. ("LGT Asset Management"). LGT Asset Management and
its worldwide affiliates are part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services to individual
and institutional investors. LGT Asset Management attempts to identify countries
and industries where economic and political factors, including currency
movements, are likely to produce above average growth rates, and to identify
companies within such countries and industries that are best positioned to
benefit from these factors. There can be no assurance that the Funds will
achieve their investment objectives.
The Funds may invest significantly in lower quality and unrated foreign
government bonds whose credit quality is generally considered the equivalent of
U.S. corporate debt securities commonly known as "junk bonds." Investments of
this type are subject to a greater risk of loss of principal and interest.
Purchasers should carefully assess the risks associated with an investment in
either Fund.
THE FUNDS ARE INVESTMENT COMPANIES DESIGNED FOR LONG TERM INVESTORS AND NOT AS
TRADING VEHICLES. THE FUNDS DO NOT REPRESENT A COMPLETE INVESTMENT PROGRAM NOR
ARE THE FUNDS SUITABLE FOR ALL INVESTORS. AN INVESTMENT IN EITHER FUND SHOULD BE
CONSIDERED SPECULATIVE AND SUBJECT TO SPECIAL RISK FACTORS, RELATED PRIMARILY TO
THE FUNDS' INVESTMENTS IN EMERGING MARKETS AND LATIN AMERICA, RESPECTIVELY,
WHICH FACTORS SHOULD BE REVIEWED CAREFULLY BY POTENTIAL INVESTORS.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information for each Fund dated February 29, 1996, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Statement of Additional Information, which may be
amended or supplemented from time to time, is available without charge by
writing to the Funds at 50 California Street, 27th Floor, San Francisco,
California 94111, or calling (800) 824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
An investment in one or both of the Funds offers the following advantages:
/ / Access to Securities Markets Around the World
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / 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 GT Global
Mutual Funds
/ / Reduced Sales Charge Plans
/ / Dollar Cost Averaging Program
/ / Automatic Investment Plan
/ / Systematic Withdrawal Plan
FOR FURTHER INFORMATION CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
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Page
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Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 8
Alternative Purchase Plan................................................................. 10
Investment Objectives and Policies........................................................ 11
Risk Factors.............................................................................. 20
How to Invest............................................................................. 25
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......................................................................... 40
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
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Investment Objectives: The Emerging Markets Fund seeks long-term growth of capital
The Latin America Growth Fund seeks capital appreciation
Principal Investments: The Emerging Markets Fund normally invests at least 65% of its
total assets in equity securities of companies in emerging markets
The Latin America Growth Fund normally invests at least 65% of its
total assets in equity and debt securities issued by Latin
American companies and governments
Investment Manager: LGT Asset Management is part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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
Exchange Privileges: Shares of a class of either Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds, which are open-end management investment companies
advised and/or administered by LGT Asset Management
Dividends and Other Distribu-
tions: Dividends paid annually from available net investment income and
realized net short-term capital gains; other distributions paid
annually from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans)
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans)
Net Asset Values: Class A and Class B shares of each Fund are 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 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comprising Liechtenstein Global Trust are indirect subsidiaries of the Prince of
Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVES AND POLICIES. The Emerging Markets Fund is a diversified
mutual fund and the Latin America Growth Fund is a non-diversified mutual fund,
both organized as series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end investment management company.
The Emerging Markets Fund's investment objective is long-term growth of capital.
It normally invests at least 65% of its total assets in equity securities of
companies in emerging markets. The Emerging Markets Fund considers emerging
markets to include all the world's countries except the United States, Canada,
Japan, Australia, New Zealand and most countries in Western Europe.
The Emerging Markets Fund may invest up to 35% of its total assets in a
combination of: (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not specifically listed in this Prospectus where investing may become
feasible and desirable subsequent to the date of this Prospectus; and (iv) cash
and money market instruments.
The Emerging Markets Fund may invest up to 20% of its total assets in below
investment grade debt securities.
See "Investment Objectives and Policies" for a more complete discussion of the
Emerging Markets Fund's investment policies.
The Latin America Growth Fund's investment objective is capital appreciation.
The Latin America Growth Fund normally invests at least 65% of its total assets
in securities of a broad range of Latin American issuers. However, the Latin
America Growth Fund reserves the right to be primarily invested in securities of
U.S. issuers for temporary defensive purposes or pending investment of the
proceeds of new sales of Fund shares. Under normal circumstances, the Latin
America Growth Fund may invest up to 35% of its total assets in a combination of
equity and debt securities of U.S. issuers. The portion of the Latin America
Growth Fund's assets not invested in equity securities may be invested in
corporate and government debt securities and in money market securities.
Although investment opportunities in certain Latin American countries currently
may be limited, LGT Asset Management believes that the potential for investment
opportunities and capital appreciation in such countries is likely to be
substantial. Though the Latin America Growth Fund may invest throughout Latin
America, the Latin America Growth Fund intends to focus its investments in
Mexico, Chile, Brazil and Argentina, which have the most developed capital
markets in Latin America. From time to time, a significant portion of the Latin
America Growth Fund's assets may be invested in any one of them.
The Latin America Growth Fund normally may invest up to 50% of its total assets
in external debt obligations issued or guaranteed by Latin American governments
or governmental entities. External debt obligations are those in which a foreign
entity or individual extends credit to a Latin American borrower. In addition,
the Latin America Growth Fund may hold and trade certain debt securities issued
by Latin American governments ("Sovereign Debt"), including those that are or
may become eligible for conversion into investments in Latin American
enterprises under debt conversion programs sponsored by various Latin American
countries, or may convert such debt into equity or other investments under debt
conversion programs. See "Investment Objectives and Policies" and "Risk
Factors."
INVESTMENT TECHNIQUES AND RISK FACTORS. The Emerging Markets Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its
portfolio positions, expressed in U.S. dollars. Investments in foreign
securities involve risks relating to political and economic developments
Prospectus Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
abroad and the differences between the regulations to which U.S. and foreign
issuers are subject. Changes in foreign currency exchange rates affect the
Emerging Markets Fund's net asset value, earnings and gains and losses realized
on sales of securities. Securities of foreign companies may be less liquid and
their prices more volatile than those of securities of comparable U.S.
companies. Because of the special risks associated with investing in emerging
markets, an investment in the Emerging Markets Fund should be considered
speculative. There is no assurance that the Emerging Markets Fund will achieve
its investment objective. See "Risk Factors."
The Latin America Growth Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions and in the rate of
exchange between the currencies in which its positions are traded and the U.S.
dollar. Because of the Latin America Growth Fund's policy of investing primarily
in securities of foreign issuers, and specifically of Latin American issuers, an
investment in the Latin America Growth Fund requires consideration of certain
factors that are not typically associated with investing in securities of most
U.S. issuers. Risk factors associated with investment in the Latin America
Growth Fund include: (1) political and economic risks; (2) religious and ethnic
instability; (3) custodial, pricing and settlement issues; (4) non-uniform
accounting, auditing and corporate disclosure standards and governmental
regulation which may lead to less publicly available and less reliable
information concerning Latin American issuers than is typically the case with
respect to U.S. issuers; (5) less regulation of Latin American securities
markets generally than is the case in the United States; (6) currency
fluctuations; (7) currency devaluation; (8) high levels of inflation; (9)
smaller, less developed, less liquid and more volatile markets than the major
U.S. securities markets; and (10) the imposition of foreign withholding taxes on
the investment income and trading profits of the Latin America Growth Fund.
Trading in Sovereign Debt involves a high degree of risk. The issuer of the debt
or the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal and/or interest when due in accordance
with the terms of such debt. Sovereign Debt may be regarded as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations and involves major
risk exposure to adverse conditions.
The Latin America Growth Fund normally invests in a substantial number of
issuers; however, the Fund's classification as a non-diversified investment
company under the Investment Company Act of 1940, as amended ("1940 Act") means
that the Latin America Growth Fund may invest a larger percentage of its assets
in individual issuers than a diversified investment company. As a result, its
exposure to credit and market risks associated with each such issuer is
increased. There is no assurance that the Latin America Growth Fund will achieve
its investment objective. See "Risk Factors."
PURCHASES AND REDEMPTIONS. Shares of common stock of the Funds are available
through broker/ dealers that have entered into agreements to sell shares with
the Funds' distributor, GT Global, Inc. ("GT Global"). Shares also may be
acquired directly through GT Global or through exchanges of shares of the other
GT Global Mutual Funds. See "How to Invest" and "Shareholder Account Manual."
Shares may be redeemed either through broker/dealers or GT Global Investor
Services, Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder
Account Manual."
Prospectus Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Emerging Markets Fund
are reflected in the following tables+*:
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases (as a % of offering price)...................................... 4.75% None
Sales charges on reinvested distributions to shareholders......................................... None None
Maximum contingent deferred sales charge.......................................................... None 5.00%
Redemption charges................................................................................ None None
Exchange fees:
-- On first four exchanges each year............................................................ None None
-- On each additional exchange.................................................................. $ 7.50 $ 7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees..................................................... 0.98% 0.98%
12b-1 distribution and service fees............................................................... 0.50% 1.00%
Other expenses.................................................................................... 0.66% 0.66%
----- -----
Total Fund Operating Expenses....................................................................... 2.14% 2.64%
----- -----
----- -----
</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."
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES*:
An investor directly or indirectly would have paid the following expenses at the
end of the periods shown on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
FIVE
ONE YEAR THREE YEARS YEARS
----- ----------- -----
<S> <C> <C> <C>
Class A Shares (1)....................................................................... $ 68 $ 112 $ 160
Class B Shares
Assuming a complete redemption at end of period (2).................................. 76 113 166
Assuming no redemption............................................................... 26 83 146
<CAPTION>
TEN
YEARS
-----
<S> <C>
Class A Shares (1)....................................................................... $ 304
Class B Shares
Assuming a complete redemption at end of period (2).................................. 332
Assuming no redemption............................................................... 332
</TABLE>
- ------------------
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable contingent deferred sales charge.
+ The Fund offers 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 Advisor
Class shares are estimated to approximate 1.65% for the Emerging Markets
Fund.
* THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Expenses are based
on the Fund's fiscal year ended October 31, 1995. Long-term shareholders may
pay more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers, Inc. ("NASD")
rules regarding investment companies. "Other expenses" include custody,
transfer agency, legal, audit and other operating expenses. See "Management"
herein and the Statement of Additional Information for more information. THE
"HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The above tables and the assumption in the Hypothetical Example of a
5% annual return are required by regulation of the Securities and Exchange
Commission applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
Prospectus Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Latin America Growth
Fund are reflected in the following tables+*:
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum contingent deferred sales charges.......................................................... None 5.00 %
Redemption charges................................................................................. None None
Exchange fees:
-- On first four exchanges each year........................................................... None None
-- On each additional exchange................................................................. $ 7.50 $ 7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.98 % 0.98 %
12b-1 distribution and service fees................................................................ 0.50 % 1.00 %
Other expenses..................................................................................... 0.64 % 0.64 %
----- -----
Total Fund Operating Expenses........................................................................ 2.12 % 2.62 %
----- -----
----- -----
</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."
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES*:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS
----- ----------- -----
<S> <C> <C> <C>
Class A Shares (1)....................................................................... $ 68 $ 111 $ 159
Class B Shares
Assuming a complete redemption at end of period (2).................................. 76 113 165
Assuming no redemption............................................................... 26 83 145
<CAPTION>
TEN YEARS
-----
<S> <C>
Class A Shares (1)....................................................................... $ 301
Class B Shares
Assuming a complete redemption at end of period (2).................................. 330
Assuming no redemption............................................................... 330
<FN>
- ------------------
(1) Assumes payment of payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable contingent deferred sales charge.
+ The Fund offers 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 Advisor
Class shares are estimated to approximate 1.63% for the Latin America
Growth Fund.
* THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Expenses are
based on the Fund's fiscal year ending October 31, 1995. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. ("NASD") rules regarding investment companies. "Other
expenses" include custody, transfer agency, legal, audit and other
operating expenses. See "Management" herein and the Statement of Additional
Information for more information. THE "HYPOTHETICAL EXAMPLE" SET FORTH
ABOVE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S ACTUAL
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The above tables and the
assumption in the Hypothetical Example of a 5% annual return are required
by regulation of the Securities and Exchange Commission applicable to all
mutual funds. The 5% annual return is not a prediction of and does not
represent the Fund's projected or actual performance.
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed information concerning income and capital
changes for one share of each class of shares of each Fund for the periods
shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon also is included in the Statement of Additional Information.
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------------
MAY 18, 1992
(COMMENCE-
YEAR ENDED OCTOBER 31, MENT OF
------------------------------------------------------ OPERATIONS)
1995(E) 1994 1993 TO OCTOBER 31, 1992
---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of
period......................... $ 18.81 $ 14.42 $ 11.10 $ 11.43
---------------- ---------------- ---------------- ----------
Income from investment
operations:
Net investment income (loss)..... 0.13 (0.02) 0.02* 0.07*
Net realized and unrealized gain
(loss) on investments.......... (4.32) 4.68 3.38 (0.40)
---------------- ---------------- ---------------- ----------
Net increase (decrease) from
investment operations.......... (4.19) 4.66 3.40 (0.33)
---------------- ---------------- ---------------- ----------
Distributions:
Net investment income.......... -- (0.01) (0.08) --
Net realized gain on
investments................... (0.77) (0.26) -- --
---------------- ---------------- ---------------- ----------
Total distributions.......... (0.77) (0.27) (0.08) --
---------------- ---------------- ---------------- ----------
Net asset value, end of period... $ 13.85 $ 18.81 $ 14.42 $ 11.10
---------------- ---------------- ---------------- ----------
---------------- ---------------- ---------------- ----------
Total investment return (c)...... (23.04)% 32.58% 30.90% (2.90)%(a)
---------------- ---------------- ---------------- ----------
---------------- ---------------- ---------------- ----------
Ratios and supplemental data:
Net assets, end of period (in
000's)......................... $252,457 $417,322 $187,808 $84,558
Ratio of net investment income
(loss) to average net assets... 0.89% (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net
assets:
with expense reductions........ 2.12% 2.06% 2.4%* 2.4%*(b)
without expense reductions..... 2.14% --%(d) --%(d) --%(d)
Portfolio turnover rate +++...... 114% 100% 99% 32%(b)
<CAPTION>
CLASS B++
------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------- APRIL 1, 1993 TO
1995(E) 1994 OCTOBER 31, 1993
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of
period......................... $ 18.68 $ 14.39 $ 11.47
---------------- ---------------- ----------------
Income from investment
operations:
Net investment income (loss)..... 0.06 (0.12) 0.00**
Net realized and unrealized gain
(loss) on investments.......... (4.29) 4.67 2.92
---------------- ---------------- ----------------
Net increase (decrease) from
investment operations.......... (4.23) 4.55 2.92
---------------- ---------------- ----------------
Distributions:
Net investment income.......... -- -- --
Net realized gain on
investments................... (0.77) (0.26) --
---------------- ---------------- ----------------
Total distributions.......... (0.77) (0.26) --
---------------- ---------------- ----------------
Net asset value, end of period... $ 13.68 $ 18.68 $ 14.39
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Total investment return (c)...... (23.37)% 31.77% 25.5%(a)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Ratios and supplemental data:
Net assets, end of period (in
000's)......................... $225,861 $291,289 $ 32,318
Ratio of net investment income
(loss) to average net assets... 0.39% (0.61)% (0.4)%**(b)
Ratio of expenses to average net
assets:
with expense reductions........ 2.62% 2.56% 2.9%**(b)
without expense reductions..... 2.64% --%(d) --%(d)
Portfolio turnover rate +++...... 114% 100% 99%
</TABLE>
- --------------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund operating expenses of
$0.02 for the year ended October 31, 1993 and for the period from May 18,
1992 (commencement of operations) to October 31, 1992, respectively. Without
such reimbursements, the expense ratios would have been 2.61% and 2.91% and
the ratio of net investment income to average net assets would have been
0.36% and 1.21% for the year ended October 31, 1993 and for the period from
May 18, 1992 (commencement of operations) to October 31, 1992, respectively.
** Includes reimbursement by LGT Asset Management of Fund operating expenses of
$0.02. Without such reimbursements, the expense ratio would have been 3.63%
and the ratio of net investment income to average net assets would have been
(0.76)%.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
(e) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
Prospectus Page 8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------
AUGUST 13, 1991
(COMMENCE-
YEAR ENDED OCTOBER 31, MENT OF
------------------------------------ OPERATIONS)
1995(A) 1994(A) 1993(A) 1992 TO OCTOBER 31, 1991
------- -------- -------- ------- -------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period..................... $26.11 $19.78 $15.59 $16.45 $ 14.29
------- -------- -------- ------- ----------
Income from investment
operations:
Net investment income
(loss)..................... 0.15 (0.08 ) 0.18 0.25 0.01
Net realized and unrealized
gain (loss) on
investments................ (9.28 ) 6.75 5.21 (0.98 ) 2.15
------- -------- -------- ------- ----------
Net increase (decrease) from
investment operations...... (9.13 ) 6.67 5.39 (0.73 ) 2.16
------- -------- -------- ------- ----------
Distributions:
Net investment income...... 0.00 (0.19 ) (0.12 ) (0.13 ) 0.00
Net realized gain on
investments............... (1.60 ) (0.15 ) (1.08 ) 0.00 0.00
------- -------- -------- ------- ----------
Total distributions...... (1.60 ) (0.34 ) (1.20 ) (0.13 ) 0.00
------- -------- -------- ------- ----------
Net asset value, end of
period..................... $15.38 $26.11 $19.78 $15.59 $ 16.45
------- -------- -------- ------- ----------
------- -------- -------- ------- ----------
Total investment return (d).. (37.16% 34.10% 37.10% (4.50% 15.10%(b)
------- -------- -------- ------- ----------
------- -------- -------- ------- ----------
Ratios and supplemental data:
Net assets, end of period (in
000's)..................... $182,462 $336,960 $129,280 $94,085 $125,038
Ratio of net investment
income (loss) to average
net assets................. 0.86% (0.29% 1.30%* 1.30%* 1.20%*(c)
Ratio of expenses to average
net assets:
with expense reductions.... 2.11% 2.04% 2.40%* 2.40%* 2.40%*(c)
without expense
reductions................ 2.12% --%(e) --%(e) --%(e) --%(e)
Portfolio turnover
rate +++................... 125% 155% 112% 159% none
<CAPTION>
CLASS B++
---------------------------------------------------------------
YEAR ENDED
OCTOBER 31,
----------------------------------------- APRIL 1, 1993 TO
1995(A) 1994(A) OCTOBER 31, 1993(A)
------------------- ------------------- -------------------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period..................... $ 25.94 $ 19.75 $ 16.26
---------- ---------- --------
Income from investment
operations:
Net investment income
(loss)..................... 0.06 (0.22) (0.07)
Net realized and unrealized
gain (loss) on
investments................ (9.19) 6.74 3.56
---------- ---------- --------
Net increase (decrease) from
investment operations...... (9.13) 6.52 3.49
---------- ---------- --------
Distributions:
Net investment income...... 0.00 (0.18) 0.00
Net realized gain on
investments............... (1.60) (0.15) 0.00
---------- ---------- --------
Total distributions...... (1.60) (0.33) 0.00
---------- ---------- --------
Net asset value, end of
period..................... $ 15.21 $ 25.94 $ 19.75
---------- ---------- --------
---------- ---------- --------
Total investment return (d).. (37.42)% 33.33% 21.50%(b)
---------- ---------- --------
---------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)..................... $134,527 $211,673 $13,576
Ratio of net investment
income (loss) to average
net assets................. 0.36% (0.79)% (0.70)%(c)
Ratio of expenses to average
net assets:
with expense reductions.... 2.61% 2.54% 2.90%(c)
without expense
reductions................ 2.62% --%(e) --%(e)
Portfolio turnover
rate +++................... 125% 155% 112%
</TABLE>
- --------------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund operating expenses of
$0.02, $0.04 and $0.01 for the years ended October 31, 1993 and 1992 and for
the period from August 13, 1991 (commencement of operations) to October 31,
1991, respectively. Without such reimbursements, the expense ratios would
have been 2.49%, 2.62% and 3.42% and the ratios of net investment income to
average net assets would have been 1.25%, 1.07% and 0.l5% for the years
ended October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, in any.
Prospectus Page 9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 a Fund represent interests in the same 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 Exchange Shares." Each
class has distinct advantages and disadvantages for different investors, and
investors should choose the class that better suits their circumstances and
objectives.
CLASS A SHARES. 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.
Purchases of $500,000 or more must be for Class A shares. Class A shares of the
Funds 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 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 a 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 Class B shareholders 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. The higher service and distribution fees paid by the
Class B shares of a Fund should cause that class to have a higher expense ratio
and to pay lower dividends per share than Class A shares of the same Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class 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 for the Funds on that Fund's Class A
shares. 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 experience higher
cumulative 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 over time the
indirect expense to the shareholder of the accumulated service and distribution
fees on the Class B shares will exceed the initial sales charge paid by the
shareholder plus the indirect expense to the shareholder of the accumulated
service and distribution fees of Class A shares. Class B investors, however,
enjoy the benefit of permitting all their dollars to work from the time the
investments are 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.
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 Class A and Class B shares of each Fund, assuming an
annual return of 5%.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made
Prospectus Page 10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 is waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in that Fund. Investors eligible
for complete initial sales charge waivers should purchase Class A shares. The
contingent deferred sales charge is waived for certain redemptions of Class B
shares of a Fund. 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 GT 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 Fund.
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
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares are 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 1,000
employees; (b) any account with assets of at least $25,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
at least .50% on the assets in the account; (c) any account with assets of at
least $25,000 if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account; (d) accounts advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust; and (e) any
of the companies comprising or affiliated with Liechtenstein Global Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, rights and warrants to acquire such securities and substantially
similar forms of equity with comparable risk characteristics. These securities
may be listed on securities exchanges, traded in various over-the-counter
("OTC") markets, or have no organized market.
For purposes of the Emerging Markets Fund's operations, "emerging markets" will
consist of all countries determined by LGT Asset Management to have developing
or emerging economies and markets. These countries generally include every
country in the world except the United States, Canada, Japan, Australia, New
Zealand and most countries located in Western Europe. See "Investment Objective
and Policies" in the Statement of Additional Information for a complete list of
all the countries which the Emerging Markets Fund does not consider to be
emerging markets.
The Emerging Markets Fund will focus its investments in those emerging markets
which LGT Asset Management believes have strongly developing economies and in
which the markets are becoming more sophisticated. For purposes of the Emerging
Markets Fund's policy of normally investing at least 65% of its total assets in
equity securities of issuers in emerging markets, the Emerging Markets
Prospectus Page 11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Fund will consider investment in the following emerging markets:
<TABLE>
<S> <C>
Argentina Mauritius
Bolivia Mexico
Botswana Morocco
Brazil Nigeria
Chile Pakistan
China Peru
Colombia Philippines
Cyprus Poland
Czech Republic Portugal
Ecuador Singapore
Egypt Republic of Slovakia
Ghana South Africa
Greece South Korea
Hong Kong Sri Lanka
Hungary Swaziland
India Taiwan
Indonesia Thailand
Israel Turkey
Jamaica Uruguay
Jordan Venezuela
Kenya Zimbabwe
Malaysia
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment, the Emerging Markets Fund will not be invested in all
such markets at all times. Moreover, investing in some of those markets
currently may not be desirable or feasible, due to the lack of adequate custody
arrangements for the Emerging Markets Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenues from business in emerging markets, provided that, in LGT
Asset Management's view, the value of such issuer's securities will tend to
reflect emerging market developments to a greater extent than developments
elsewhere; or (iii) organized under the laws of, or with a principal office in,
an emerging market.
In managing the Emerging Markets Fund, LGT Asset Management seeks to identify
those countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. LGT Asset
Management then seeks to invest in those companies in such countries and
industries that are best positioned and managed to take advantage of these
economic and political factors. The assets of the Emerging Markets Fund
ordinarily will be invested in the securities of issuers in at least three
different emerging markets. The Emerging Markets Fund may invest up to 15% of
its net assets in illiquid securities.
Under normal circumstances, the Emerging Markets Fund may invest up to 35% of
its total assets in a combination of (i) debt securities of government or
corporate issuers in emerging markets; (ii) equity and debt securities of
issuers in developed countries, including the United States; (iii) securities of
issuers in emerging markets not included in the list of emerging markets above,
if investing therein becomes feasible and desirable subsequent to the date of
this Prospectus; and (iv) cash and money market instruments. In evaluating
investments in securities of issuers in developed markets, LGT Asset Management
will consider, among other things, the business activities of the issuer in
emerging markets and the impact that developments in emerging markets are likely
to have on the issuer.
The Emerging Markets Fund may also use instruments (including forward contracts)
often referred to as "derivatives." See "Options, Futures and Forward Currency
Transactions."
INVESTMENTS IN DEBT SECURITIES. The Emerging Markets Fund may invest in debt
securities of both governmental and corporate issuers in emerging markets.
Emerging market debt securities often are rated below investment grade.
"Investment grade" debt securities are those rated within the four highest
ratings categories of Standard & Poor's Ratings Services ("S&P") or Moody's
Investors Services ("Moody's") or, if not rated, determined by LGT Asset
Management to be of comparable quality. Securities rated Baa by Moody's are
investment grade debt securities but are considered to have speculative
characteristics. Many emerging market debt securities are not rated by U.S.
ratings agencies. The Emerging Markets Fund will not invest more than 20% of its
total assets in debt securities rated below investment grade. Investment in
non-investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." See "Risk Factors -- Risks Associated
with Debt Securities" for a more complete discussion.
Prospectus Page 12
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GT GLOBAL LATIN AMERICA GROWTH FUND
If the rating of any of the Emerging Markets Fund's investments drops below a
minimum rating considered acceptable by LGT Asset Management for investment by
the Emerging Markets Fund, the Fund will dispose of any such security as soon as
practicable and consistent with the best interests of the Emerging Markets Fund
and its shareholders.
Capital appreciation in debt securities in which the Emerging Markets Fund
invests may arise as a result of favorable changes in relative foreign exchange
rates, in relative interest rate levels and/or in the creditworthiness of
issuers. The receipt of income from debt securities owned by the Emerging
Markets Fund is incidental to the Emerging Markets Fund's objective of long-term
growth of capital.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Emerging Markets Fund
may be able to invest in certain emerging markets solely or primarily through
governmentally authorized investment vehicles or companies. Pursuant to the 1940
Act, the Emerging Markets Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company, as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the 1940 Act and market availability. The
Emerging Markets Fund does not intend to invest in such investment companies
unless, in the judgment of LGT Asset Management, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in an investment company, the Emerging Markets Fund would bear its
ratable share of that investment company's expenses, including its advisory and
administration fees. At the same time the Emerging Markets Fund would continue
to pay its own management fees and other expenses.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, LGT Asset Management may employ a temporary defensive investment
strategy if it determines such a strategy to be warranted due to market,
economic, or political conditions. Pursuant to such a defensive strategy, the
Emerging Markets Fund temporarily may invest up to 100% of its assets in cash
(U.S. dollars, foreign currencies, multinational currency units) and/or high
quality debt securities or money market instruments of U.S. or foreign issuers,
and most or all of the Emerging Markets Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Emerging
Markets Fund employs a temporary defensive strategy, it will not be invested so
as to achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of Emerging Markets
Fund shares or to meet ordinary daily cash needs, the Emerging Markets Fund
temporarily may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest any portion of its assets in money market
instruments.
The Emerging Markets Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Fund may not
invest more than 25% of its total assets in bank securities; (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.
The Emerging Markets Fund may invest in commercial paper rated as low as A-3 by
S&P or P-3 by Moody's or, if not rated, determined by LGT Asset Management to be
of comparable quality. Obligations rated A-3 and P-3 are considered by S&P and
Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
BORROWING. It is a fundamental policy of the Emerging Markets Fund that it may
borrow an amount up to 33 1/3% of its total assets in order to
Prospectus Page 13
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
meet redemption requests. Borrowing may cause greater fluctuation in the value
of Emerging Markets Fund shares than would be the case if the Emerging Markets
Fund did not borrow, but also may enable the Emerging Markets Fund to retain
favorable securities positions rather than liquidating such positions to meet
redemptions. The Emerging Markets Fund will not borrow to leverage its
portfolio. It is a nonfundamental policy of the Emerging Markets Fund that it
will not purchase securities during times when outstanding borrowings represent
5% or more of its total assets.
LATIN AMERICA GROWTH FUND
The Latin America Growth Fund's investment objective is capital appreciation.
The Latin America Growth Fund normally invests at least 65% of its total assets
in the securities of a broad range of Latin American issuers. Though the Latin
America Growth Fund may invest throughout Latin America, under current market
conditions the Latin America Growth Fund expects to invest primarily in equity
and debt securities issued by companies and governments in Mexico, Chile, Brazil
and Argentina.
Consistent with its investment objective and policies, the Latin America Growth
Fund may invest in common stock, preferred stock, rights, warrants and
securities convertible into common stock, and other substantially similar forms
of equity securities with comparable risk characteristics, as well as bonds,
notes, debentures or other forms of indebtedness that may be developed in the
future. These securities may be listed on securities exchanges, traded in
various OTC markets or have no organized market.
The Latin America Growth Fund will purchase equity and debt securities in
seeking its objective of capital appreciation. Capital appreciation in debt
securities may arise as a result of a favorable change in relative foreign
exchange rates, in relative interest rate levels, or in the credit-worthiness of
issuers. The receipt of income from such debt securities is incidental to the
Latin America Growth Fund's objective of capital appreciation.
The Latin America Growth Fund defines securities of Latin American issuers to
include the following: (a) securities of companies organized under the laws of,
or having a principal office located in, a Latin American country; (b)
securities of companies that derive 50% or more of their total revenues from
business in Latin America, provided that, in LGT Asset Management's view, the
value of such issuers' securities reflect Latin American developments to a
greater extent than developments elsewhere; (c) securities issued or guaranteed
by the government of a country in Latin America, its agencies or
instrumentalities, or municipalities, or the central bank of such country; (d)
U.S. dollar-denominated securities or securities denominated in a Latin American
currency issued by companies to finance operations in Latin America; and (e)
securities of Latin American issuers, as defined herein, in the form of
depositary shares. For purposes of the foregoing definition, the Latin America
Growth Fund's purchases of securities issued by companies outside of Latin
America to finance their Latin American operations will be limited to securities
the performance of which is materially related to such company's Latin American
activities. For purposes of this Prospectus, unless otherwise indicated, the
Latin America Growth Fund defines Latin America to include the following
countries: Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, French Guiana,
Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles,
Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and
Venezuela.
ALLOCATION OF THE LATIN AMERICA GROWTH FUND'S INVESTMENTS. The extent of the
Latin America Growth Fund's holdings in any Latin American country will vary
from time to time, based upon LGT Asset Management's judgment regarding where
investment opportunities lie. In allocating investments among the various Latin
American countries, LGT Asset Management looks principally at the stage of
industrialization, potential for productivity gains through economic
deregulation, the impact of financial liberalization and monetary conditions and
the political outlook in each country. The Latin America Growth Fund may invest
more than 25% of its total assets in any of these four countries but does not
expect to invest more than 60% of its total assets in any one country.
The portion of the Latin America Growth Fund's total assets invested directly in
Chile may be less than the portions invested in other Latin American countries,
particularly Mexico, because, at present, with limited exceptions, capital
invested directly in Chile normally cannot be repatriated for at least one year.
In addition, repatriation restrictions apply to investments made under the debt
conversion programs in some countries.
Prospectus Page 14
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Normally, the Latin America Growth Fund will invest a majority of its assets in
equity securities. The percentage allocation between equity and debt will vary
from country to country. The following factors, among others, will influence the
proportion of the Latin America Growth Fund's assets to be invested in equity
versus debt: level and anticipated direction of interest rates; expected rates
of economic growth and corporate profits growth; changes in Latin American
government policy including regulation governing industry, trade, financial
markets, foreign and domestic investment; substance and likely development of
government finances; and the condition of the balance of payments and changes in
the terms of trade.
Under normal circumstances, the Latin America Growth Fund may invest up to 35%
of its total assets in a combination of equity and debt securities of U.S.
issuers. In evaluating investments in securities of U.S. issuers, LGT Asset
Management will consider, among other things, the issuer's Latin American
business activities and the impact that development in Latin America may have on
the issuer's operations and financial condition.
The Latin America Growth Fund may also use instruments (including forward
contracts) often referred to as "derivatives." See "Options, Futures and Forward
Currency Transactions."
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Growth Fund may be able to invest in such countries solely or primarily
through governmentally approved investment vehicles or companies. For example,
due to Chile's current investment restrictions, the Latin America Growth Fund
currently intends to limit most of its Chilean investments to indirect
investments through American Depositary Receipts ("ADRs") and established
Chilean investment companies, the shares of which are not subject to
repatriation restrictions.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. There
is no limitation on the percentage of the Latin America Growth Fund's assets
which may be invested in debt securities which are rated BB or lower by S&P or
Ba or lower by Moody's or, if not rated, are deemed by LGT Asset Management to
be of comparable quality. These debt securities are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds." Most debt securities in
which the Latin America Growth Fund will invest are not rated; if rated, it is
expected that such ratings would be below investment grade. However, the Latin
America Growth Fund will not invest in debt securities that are in default in
payment as to principal or interest. See "Risk Factors -- Risks Associated with
Debt Securities."
During 1990, the Mexican external debt markets experienced significant changes
with the completion of the "Brady Plan" restructurings in those markets. The
restructurings provided for the exchange of loans and cash for newly issued
bonds ("Brady Bonds"). Brady Bonds fall into two categories: collateralized
Brady Bonds and bearer Brady Bonds. Both types of Brady Bonds are issued in
various currencies, primarily the U.S. dollar. Brady Bonds are actively traded
in the OTC secondary market for Latin American debt. U.S. dollar-denominated
collateralized bonds, which may be fixed par bonds or floating rate discount
bonds, are collateralized in full as to principal by U.S. Treasury Zero Coupon
bonds having the same maturity. At least one year of rolling interest payments
are collateralized by cash or other investments. Brady Bonds have been issued
by, among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Jordan, Mexico, Nigeria, Philippines, Poland, Uruguay,
Venezuela and are expected to be issued by Panama, Peru and other emerging
market countries. Approximately $139 billion in principal amount of Brady Bonds
are outstanding, the largest proportion having been issued by Brazil, Argentina
and Mexico. Brady Bonds issued by Brazil, Argentina and Mexico currently are
rated below investment grade.
Prospectus Page 15
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT IN OTHER INVESTMENT COMPANIES
OR VEHICLES. Under the 1940 Act, the Latin America Growth Fund generally may
invest up to 10% of its total assets in shares of other investment companies and
up to 5% of its total assets in any one investment company, or acquire up to 3%
of the voting stock of any one investment company. Investment in other
investment companies or vehicles may be the most practical or only manner in
which the Latin America Growth Fund can participate in certain Latin American
securities markets. Such investment may involve the payment of substantial
premiums above the value of such issuers' portfolio securities, and is subject
to limitations under the 1940 Act and market availability. There can be no
assurance that vehicles for investing in certain Latin American countries will
be available for investment. The Latin America Growth Fund does not intend to
invest in such vehicles or funds unless, in the judgment of LGT Asset
Management, the potential benefits of such investment justify the payment of any
applicable premium or sales charge. As a shareholder in an investment company,
the Latin America Growth Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time the Latin America Growth Fund would continue to pay its own management fees
and other expenses.
TEMPORARY DEFENSIVE STRATEGIES. The Latin America Growth Fund may invest up to
100% of its assets in cash (U.S. dollars, foreign currencies, multinational
units) and/or high quality debt securities or money market instruments to
generate income to defray Latin America Growth Fund expenses, for temporary
defensive purposes and pending investment in accordance with the Latin America
Growth Fund's investment objective and policies. In addition, the Latin America
Growth Fund reserves the right to be primarily invested in U.S. securities for
temporary defensive purposes or pending investment of the proceeds of sales of
new shares of the Fund. The Latin America Growth Fund may assume a temporary
defensive position when, due to political, market or other factors broadly
affecting Latin American markets, LGT Asset Management determines that
opportunities for capital appreciation in those markets would be significantly
limited over an extended period, or that investing in those markets presents
undue risk of loss.
The Latin America Growth Fund may invest in the following types of money market
securities (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or in the currency of any Latin American
country, which consist of: (a) obligations issued or guaranteed by (i) the U.S.
government or the government of a Latin American country, their agencies or
instrumentalities, or municipalities; (ii) international organizations designed
or supported by multiple foreign governmental entities to promote economic
reconstruction or development ("supranational entities"); (b) finance company
obligations, corporate commercial paper and other short-term commercial
obligations; (c) bank obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances), subject to the restriction
that the Latin America Growth Fund may not invest more than 25% of its total
assets in bank securities; (d) repurchase agreements with respect to the
foregoing; and (e) other substantially similar short-term debt securities with
comparable risk characteristics.
The Latin America Growth Fund may invest in commercial paper rated as low as A-3
by S&P or P-3 by Moody's. Such obligations are considered to have an acceptable
capacity for timely repayment. However, these securities may be more vulnerable
to adverse effects or changes in circumstances than obligations carrying higher
designations.
The banks whose obligations may be purchased by the Latin America Growth Fund
and the banks and broker/dealers with whom the Latin America Growth Fund may
enter into repurchase agreements include any member bank of the Federal Reserve
System, and any broker/dealer or any foreign bank whose creditworthiness has
been determined by LGT Asset Management, in accordance with guidelines approved
by the Company's Board of Directors, to be at least equal to that of issuers of
commercial paper that the Latin America Growth Fund may purchase, as described
above. LGT Asset Management will review and monitor the creditworthiness of such
institutions under the Board's general supervision. In this regard, LGT Asset
Management will consider, among other factors, the capitalization of the
institution, LGT Asset Management's prior dealings with the institution, any
rating of the institution's senior long term debt by independent rating agencies
and other factors LGT Asset Management deems appropriate.
Prospectus Page 16
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
ADDITIONAL INVESTMENT POLICIES OF EMERGING MARKETS FUND AND LATIN AMERICA GROWTH
FUND
SECURITIES LENDING. The Funds may lend their portfolio securities to
broker/dealers or to other institutional investors. At all times a loan is
outstanding, the Funds require the borrower to maintain with the Funds'
custodian collateral consisting of cash, U.S. government securities or other
liquid, high grade debt securities at least equal to the value of the borrowed
securities, plus any accrued interest. The Funds will receive any interest paid
on the loaned securities and a fee and/or a portion of the interest earned on
the collateral. Income received in connection with securities lending may be
used to offset a Fund's custody fees. The Funds limit their 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 delays in receiving
additional collateral or in recovery of the loaned securities and possible loss
of rights in the collateral should the borrower fail financially.
PRIVATIZATIONS. The governments in some emerging markets and Latin American
countries have been engaged in programs of selling part or all of their stakes
in government owned or controlled enterprises ("privatizations"). LGT Asset
Management believes that privatizations may offer opportunities for significant
capital appreciation, and intends to invest assets of the Funds in
privatizations in appropriate circumstances. In certain emerging markets and
Latin American countries, the ability of foreign entities such as the Funds to
participate in privatizations may be limited by local law and/or the terms on
which the Funds may be permitted to participate may be less advantageous than
those afforded local investors. There can be no assurance that Latin American
governments and governments in emerging markets will continue to sell companies
currently owned or controlled by them or that privatization programs will be
successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Emerging Markets Fund and the
Latin America Growth Fund may purchase debt securities on a "when-issued" basis
and may purchase or sell such securities on a "forward commitment" basis in
order to hedge against anticipated changes in interest rates and prices. The
price, which is generally expressed in yield terms, is fixed at the time the
commitment is made, but delivery and payment for the securities take place at a
later date. When-issued securities and forward commitments may be sold prior to
the settlement date, but the Funds will purchase or sell when-issued securities
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 Funds. If the Funds dispose of the right to
acquire a when-issued security prior to its acquisition or disposes of its right
to deliver or receive against a forward commitment, it may incur a gain or loss.
At the time the Funds enter into a transaction on a when-issued or forward
commitment basis, a segregated account consisting of cash or high grade liquid
debt securities equal to the value of the when-issued or forward commitment
securities will be established and maintained with that Fund's custodian bank
and will be marked to market daily. There is a risk that the securities may not
be delivered and that the Funds may incur a loss. The Funds also may enter into
reverse repurchase agreements, although (i) the Emerging Markets Fund currently
does not intend to do so and (ii) the Latin America Growth Fund may not enter
into such agreements with respect to more than 5% of its total assets.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. In seeking to protect
against the effect of adverse changes in the financial markets in which the
Funds invest, or against currency exchange rate or interest rate changes that
are adverse to the present or prospective positions of the Funds, both Funds may
use forward currency contracts, options on securities, options on indices,
options on currencies, and futures contracts and options on futures contracts on
U.S. and foreign government securities and currencies. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). Each
Fund may enter into such instruments up to the full value of its portfolio
assets. There can be no assurance that a Fund's risk management policies will
succeed. These techniques are described below and are further detailed in the
Statement of Additional Information.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets and most Latin
American markets, to securities denominated in
Prospectus Page 17
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
such currencies or to securities of issuers domiciled or principally engaged in
business in such emerging markets. To the extent that such a market does not
exist, LGT Asset Management may not be able to effectively hedge its investment
in such Latin American and emerging markets.
In addition, each Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that LGT Asset Management intends to include in the Fund's
portfolio. The Funds also may buy and sell put and call options on indices. Such
index options serve to hedge against overall fluctuations in the securities
markets or market sectors generally, rather than anticipated increases or
decreases in the value of a particular security.
Further, the Funds may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Funds may also buy index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. A Fund may use interest rate futures contracts and
options thereon to hedge against changes in the general level of interest rates.
The Funds may write and purchase put and call options on securities, indices and
currencies that are traded on recognized securities exchanges and on
over-the-counter ("OTC") markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), have the effect of limiting the extent to which the Funds may enter
into forward contracts or futures contracts, or engage in options transactions.
See "Taxes" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Funds may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Funds may each enter into forward
currency contracts either with respect to specific transactions or with respect
to its portfolio positions. For example, when the Funds anticipate making a
purchase or sale of a security, it may enter into a forward currency contract in
order to set the rate (either relative to the U.S. dollar or another currency)
at which a currency exchange transaction related to the purchase or sale will be
made. Further, when LGT Asset Management believes that a particular currency may
decline compared to the U.S. dollar or another currency, the Funds may enter
into a forward contract to sell the currency LGT Asset Management expects to
decline in an amount up to the value of that Fund's portfolio securities
denominated in a foreign currency. The Funds may also purchase put or call
options on currencies, futures contracts on currencies and options on futures
contracts on currencies to hedge against movements in exchange rates.
Although either Fund might not employ any of the foregoing strategies, its use
of forward currency contracts, futures contracts, and options would involve
certain investment risks and transaction costs to which it might not otherwise
be subject. These risks include: (1) dependence on LGT Asset Management's
ability to predict movements in the prices of individual securities,
fluctuations in the general securities markets and movements in interest rates
and currency markets; (2) imperfect correlation, or even no correlation, between
movements in the price of forward contracts, options, futures contracts or
options thereon and movements in the price of the currency or security hedged or
used for cover; (3) the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which the Funds invest;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible inability of a Fund to purchase or sell a portfolio security at
a time when it would otherwise be favorable for it to do so, or the possible
need for a Fund to sell a security at a disadvantageous time, due to the need
for the Fund to maintain "cover" or to set aside securities in connection with
hedging transactions; and (6) the possible need of a Fund to defer closing out
of certain options, futures contracts and options thereon and forward currency
contracts in order to qualify or continue to qualify for the beneficial tax
treatment afforded regulated investment companies under the Code. See
"Dividends, Other Distributions and Federal Income Taxation" herein
Prospectus Page 18
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
and "Taxes" in the Statement of Additional Information. If LGT Asset Management
incorrectly forecasts securities market movements, currency exchange rates or
interest rates in utilizing a strategy for a Fund, it would be in a better
position if it had not hedged at all. The Funds may each also conduct its
foreign currency exchange transactions on a spot (I.E., cash) basis at the spot
rate prevailing in the foreign currency exchange market.
Prospectus Page 19
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
RISK FACTORS
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND. The Emerging Markets Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its portfolio
positions and its net currency exposure. There is no assurance that the Emerging
Markets Fund will achieve its investment objective.
LGT Asset Management believes that the issuers of securities in emerging markets
often have sales and earnings growth rates which exceed those in developed
countries and that such growth rates may in turn be reflected in more rapid
share price appreciation. Accordingly, LGT Asset Management believes that the
Emerging Markets Fund's policy of investing in equity securities of companies in
emerging markets may enable the Emerging Markets Fund to achieve results
superior to those produced by mutual funds with similar objectives to those of
the Emerging Markets Fund that invest solely in equity securities of issuers
domiciled in the U.S. and/or in other developed markets.
Nonetheless, investing in the Emerging Markets Fund entails a substantial degree
of risk. Because of the special risks associated with investing in emerging
markets, an investment in the Emerging Markets Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Emerging Markets Fund could lose its entire investment in
that market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain countries with emerging markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited.
The securities of non-U.S. issuers generally are not registered with the SEC,
nor are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. The Emerging Markets Fund's
net investment income and/or capital gains from its foreign investment
activities may be subject to non-U.S. withholding taxes.
Prospectus Page 20
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Emerging Markets Fund to make intended securities purchases due
to settlement problems could cause the Emerging Markets Fund to miss attractive
investment opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Emerging Markets Fund
due to subsequent declines in value of the portfolio security or, if the
Emerging Markets Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Emerging Markets Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Emerging Markets
Fund, to suspend redemption of its shares for any period during which an
emergency exists, as determined by the SEC. Accordingly, when the Emerging
Markets Fund believes that circumstances dictate, it will promptly apply to the
SEC for a determination that such an emergency exists within the naming of
Section 22(e) of the 1940 Act. During the period commencing from the Emerging
Markets Fund's identification of such conditions until the date of any SEC
action, the Emerging Markets Fund's portfolio securities in the affected markets
will be valued at fair value determined in good faith by or under the direction
of the Company's Board of Directors.
LATIN AMERICA GROWTH FUND. Pursuant to the 1940 Act, the Latin America Growth
Fund's classification as a non-diversified investment company allows it, with
respect to 50% of its assets, to invest more than 5% of its total assets in the
securities of any issuer. Consequently, as the Latin America Growth Fund may be
invested in the securities of a limited number of Latin American issuers, the
performance of any single issuer may have a more significant effect upon the
overall performance of the Latin America Growth Fund than if the Latin America
Growth Fund was a diversified investment company.
The Latin America Growth Fund normally invests at least 65% of its total assets
in the securities of Latin American issuers. Accordingly, an investment in the
Latin America Growth Fund requires consideration of certain factors not
typically associated with investing in most U.S. issuers.
Investing in securities of Latin American issuers may entail risks relating to
the potential political and economic instability of certain Latin American
countries and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Latin America Growth Fund
could lose its entire investment in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Accordingly, when the Latin America
Growth Fund believes that circumstances dictate, it will follow the procedures
as described above concerning the Emerging Markets Fund.
The Latin America Growth Fund may not invest more than 10% of its net assets in
illiquid securities.
Prospectus Page 21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
The Latin America Growth Fund will treat any Latin American securities that are
subject to restrictions on repatriation for more than seven days, as well as any
securities issued in connection with Latin American debt conversion programs
that are restricted as to remittance of invested capital or profits, as illiquid
securities for purposes of this limitation. The Latin America Growth Fund will
also treat repurchase agreements with maturities in excess of seven days as
illiquid securities.
The Latin America Growth Fund invests in securities denominated in currencies of
Latin American countries. Accordingly, changes in the value of these currencies
against the U.S. dollar will result in corresponding changes in the U.S. dollar
value of the Latin America Growth Fund's assets denominated in those currencies.
Such changes will also affect the Latin America Growth Fund's income.
In addition, many of the currencies of Latin American countries have experienced
steady devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Latin America Growth Fund's portfolio securities are denominated
may have a detrimental impact on the Latin America Growth Fund.
Some Latin American countries also may have fixed currencies whose values
against the U.S. dollar are not independently determined. In addition, there is
a risk that certain Latin American countries may restrict the free conversion of
their currencies into other currencies. Further, certain Latin American
currencies may not be internationally traded.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain Latin American
countries.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Expropriation, confiscatory
taxation, nationalization, political, economic or social instability or other
developments could adversely affect the assets of the Latin America Growth Fund
held in particular Latin American countries. Furthermore, certain Latin American
countries may impose withholding taxes on dividends payable to the Latin America
Growth Fund at a higher rate than those imposed by other foreign countries. This
may reduce the Latin America Growth Fund's investment income available for
distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. Currently, Brazil is the largest debtor among
developing countries, Mexico is the second largest and Argentina the third. At
times certain Latin American countries have declared moratoria on the payment of
principal and/or interest on external debt.
Investment in Sovereign Debt involves a high degree of risk. The issuers or
governmental authorities that control the repayment of Sovereign Debt may not be
able or willing to make principal and/or interest payments when due in
accordance with the terms of such debt. Investors should be aware that the
Sovereign Debt instruments in which the Latin America Growth Fund may invest
involve great risk and are deemed to be the equivalent in terms of quality to
securities rated below investment grade by Moody's and S&P. A substantial
portion of the Sovereign Debt in which the Fund will invest, including Brady
Bonds, is issued as part of debt restructurings and such debt is to be
considered speculative. There is a history of defaults with respect to
commercial bank loans by public and private entities issuing Brady Bonds.
The Latin America Growth Fund and LGT Asset Management believe that carefully
selected investments in joint ventures, cooperatives, partnerships and state
enterprises and other similar vehicles which are illiquid (collectively,
"Special Situations") could enable the Latin America Growth Fund to achieve
capital appreciation substantially exceeding the appreciation the Latin America
Growth Fund would realize if it did not make such investments. However, in order
to limit investment risk, the Latin America Growth Fund will invest no more than
5% of its total assets in Special Situations.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Emerging
Prospectus Page 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Markets Fund or by the Latin America Growth Fund generally will vary inversely
with market interest rates. If interest rates in a market fall, the Funds' debt
securities issued by governments or companies in that market ordinarily will
increase in value. If market interest rates increase, however, the debt
securities owned by the Funds in that market will likely decrease in value.
As discussed above, the Emerging Markets Fund may invest up to 20% of its total
assets in debt securities rated below investment grade and the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities of any
rating. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or 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 for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. 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. Lower quality debt securities are also generally considered to be
subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic conditions. These foreign debt securities are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market and Latin American governments
that issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank and may not be able or willing to make principal and/or interest
repayments as they come due. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and may be subordinated to the claims of
other creditors of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Funds. In
addition, the Funds may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and either Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Funds to obtain accurate market quotations for purposes of
valuing the Funds' portfolios. The Funds may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest
include: (i) potential adverse publicity;
Prospectus Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
(ii) heightened sensitivity to general economic or political conditions; and
(iii) the likely adverse impact of a major economic recession.
A Fund 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 a Fund may have limited legal recourse in the event of a default.
Debt securities issued by governments in emerging or Latin American markets can
differ from debt obligations issued by private entities in that remedies from
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
holders of commercial bank debt may not contest payments to the holders of debt
securities issued by governments in emerging or Latin American markets in the
event of default by the governments under commercial bank loan agreements.
LGT Asset Management attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors. Nonetheless, investors should carefully review the investment objective
and policies of the Fund and consider their ability to assume the investment
risks involved before making an investment.
CURRENCY RISK. Since the Emerging Markets Fund and the Latin America Growth Fund
may invest substantially in securities denominated in currencies other than the
U.S. dollar, and since the Funds may hold foreign currencies, each Fund will be
affected favorably or unfavorably by exchange control regulations or changes in
the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of each Fund's shares, and also
may affect the value of dividends and interest earned by the Funds and gains and
losses realized by the Funds. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. Exchange rates are determined
by the forces of supply and demand in the foreign exchange markets. These forces
are affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors. If
the currency in which a security is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline in
the exchange rate of the currency would adversely affect the value of the
security expressed in dollars.
OTHER INFORMATION. The Emerging Markets Fund's and Latin America Growth Fund's
annual operating expenses, which are higher than those of many other investment
companies of comparable size, are believed by each Fund's management to be
comparable to expenses of other open-end management investment companies that
invest primarily in the securities of countries in a single geographic region or
regions.
The Emerging Markets Fund's and the Latin America Growth Fund's portfolio
turnover rates during the fiscal year ended October 31, 1995 were 114% and 125%,
respectively. See the sub-caption "Portfolio Trading and Turnover" in the
Statement of Additional Information. Increases in portfolio turnover would
involve correspondingly greater transaction costs in the form of brokerage
commissions or dealer spreads and other costs that a Fund will bear directly,
and could result in the realization of net capital gains which would be taxable
when distributed to shareholders.
The investment objective of the Emerging Markets Fund and of the Latin America
Growth Fund may not be changed without the approval of a majority of the
respective Fund's outstanding voting securities. As defined in the 1940 Act and
as used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented, or (ii) more
than 50% of the outstanding shares. In addition, the Emerging Markets Fund and
the Latin America Growth Fund each have adopted certain investment limitations
as fundamental policies which also may not be changed without shareholder
approval. A complete description of these limitations is included in the
Statement of Additional Information. Unless specifically noted, the Emerging
Markets Fund's and the Latin America Growth Fund's investment policies described
in this Prospectus and in the Statement of Additional Information are not
fundamental policies and may be changed by a vote of a majority of the Company's
Board of Directors without shareholder approval.
Prospectus Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Each Fund is authorized to issue three classes of shares. Class A
shares of the Funds 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. 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 (with a $25
minimum 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 "Purchasing Class A Shares" and Purchasing Class B
Shares" below. The Funds and GT Global reserve the right to reject any purchase
order and to suspend the offering of shares for a period of time.
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF A FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY A
CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000 OR
MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT 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/dealer, at the investor's option, subsequent purchases may be made
directly through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT 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 GT Global or directly through GT Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, each Fund's distributor, by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Account Application indicating the
class of shares together with a check to cover the purchase in accordance with
the instructions provided in the Shareholder Account Manual. Purchases will be
executed at the public offering price next determined after the Transfer Agent
has received the Account Application and check. Subsequent investments do not
need to be accompanied by such an application.
Investors also may purchase shares of the Funds through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to a
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Funds. The Transfer Agent
Prospectus Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing a Fund's shares will not be issued unless an investor submits a
written request to the Transfer Agent, or unless the investor's broker/dealer
requests that the Transfer Agent provide certificates. Shares of a Fund are
recorded on a register by the Transfer Agent, and shareholders who do not elect
to receive certificates have the same rights of ownership as if certificates had
been issued to them. Redemptions and exchanges by shareholders who hold
certificates may take longer to effect than similar transactions involving
non-certificated shares because the physical delivery and processing of properly
executed certificates is required. ACCORDINGLY, THE FUNDS AND GT GLOBAL
RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares is equal to the net asset
value per share (see "Calculation of Net Asset Value") including any sales
charge determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
REALLOWANCE AS
AMOUNT OF PURCHASE ------------------------------ PERCENTAGE OF
AT THE PUBLIC OFFERING NET THE OFFERING
OFFERING PRICE PRICE INVESTMENT PRICE
- --------------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Less than $50,000.... 4.75% 4.99% 4.25%
$50,000 but less than
$100,000........... 4.00% 4.17% 3.50%
$100,000 but less
than $250,000...... 3.00% 3.09% 2.75%
$250,000 but less
than $500,000...... 2.00% 2.04% 1.75%
$500,000 or
more............... 0.00% 0.00% *
<FN>
- ------------------
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's
share purchases over a rolling twelve month period from the date of the
transaction.
</TABLE>
All shares purchased pursuant to a sales charge waiver based on the aggregate
purchase amount's equalling at least $500,000 will be subject to a contingent
deferred sales charge for the first year 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, GT Global may reallow to broker/ dealers the full amount of
the sales charge on Class A shares. In some instances, GT Global may offer these
reallowances only to broker/dealers that have sold or may sell significant
amounts of Class A shares. To the extent that GT Global reallows the full amount
of the sales charge to broker/ dealers, such broker/dealers may be deemed to be
underwriters under the Securities Act of 1933, as amended ("1933 Act"). These
commissions may be paid to broker/dealers and other financial institutions that
initiate purchases made pursuant to sales charge waivers (i) and (vii),
described below under "Sales Charge Waivers -- Class A Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years. 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, 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 plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 100 but less than 1,000
employees.
Prospectus Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which LGT Asset Management serves as investment manager or
administrator; employees or retired employees of the companies comprising
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver equals at least $500,000, 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 GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund 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 GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October, 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. 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 of the Funds 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 brokers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Funds at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the amount equal to
the total purchase price of the investor's concurrent purchases of the other GT
Global Mutual Funds (other than GT Global Dollar Fund) plus (c) the price of all
shares of GT Global Mutual Funds (other than shares of GT Global Dollar Fund not
acquired by exchange) already held by the investor. To receive the Right of
Accumulation, at the time of purchase investors must give their brokers, the
Transfer Agent or GT Global sufficient information to permit confirmation of
qualification. THE FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A
SHARES OF THE FUNDS AND OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL
DOLLAR FUND).
Prospectus Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in Class A shares of
the Funds and the Class A shares of other GT Global Mutual Funds (other than GT
Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than GT Global Dollar Fund), the prior purchase may be included under the
LOI and an appropriate adjustment, if any, with respect to the sales charges
paid by the investor in connection with the prior purchase will be made, based
on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI, the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
Investors should be aware that either Fund may, in the future, suspend the
offering of its shares although not for previously established LOIs. The Latin
America Growth Fund has previously suspended the offering of its shares. If all
ongoing sales of either Fund shares are suspended, however, an LOI executed in
connection with the offering of that Fund's shares may continue to be completed
by the purchase of shares of one or more other GT Global Mutual Funds (other
than GT Global Dollar Fund).
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. Purchases of
Class A shares of two or more GT Global Mutual Funds (other than GT Global
Dollar Fund) may be combined for this purpose, and the right of accumulation
also applies to such purchases. If a shareholder redeems any Class A shares that
were purchased without a sales charge by reason of a purchase of $500,000 or
more within one year after the date of purchase, a contingent deferred sales
charge of 1% of the lower of the original purchase price or the net asset value
of such shares at the time of redemption will be charged. Class A shares 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 one year after
their purchase. Such shares purchased for at least $500,000 without a sales
charge may be exchanged for Class A shares of another GT Global Mutual Fund
(other than GT Global Dollar Fund) without the imposition of a contingent
deferred sales charge, although the contingent deferred sales charge described
above will apply to the redemption of the shares acquired through an exchange.
The waivers set forth under "Contingent Deferred Sales Charge Waivers" below
apply to redemptions of Class A shares upon which a contingent deferred sales
charge would otherwise be imposed. For federal income tax purposes, the amount
of the contingent deferred sales charge will reduce the gain or increase the
loss, as the case may be, on the amount realized on redemption. The amount of
any contingent deferred sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
The public offering price of the Class B shares of each Fund is the next
determined net asset value per share. See "Calculation of Net Asset Value". No
initial sales charge is imposed. A contingent deferred sales charge, however, is
imposed on certain redemptions of Class B shares. 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 a Fund 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 six years after their purchase. Redemptions of most other
Class B shares will be subject to a contingent deferred sales charge. See
"Contingent Deferred
Prospectus Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable 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 $335.00 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 a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.
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 the redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for exchanges, as described
below, and for redemptions in connection with each 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 GT Global, IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(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 the Fund
within 180 days of a prior redemption; (6) redemptions pursuant to the 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 GT Global Mutual Funds, which are permitted to be
made without penalty pursuant to the Code (other than tax-free rollovers or
transfers of asset) 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 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 of 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
Prospectus Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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
AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of the Emerging Markets Fund or Latin America Growth Fund through the GT
Global Automatic Investment Plan. Under this Plan, an amount specified by the
shareholder of $100 or more (or $25 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 either the Emerging Markets Fund or Latin
America Growth Fund. Investors should be aware that the Emerging Markets Fund or
Latin America Growth Fund may suspend the offering of its shares in the future,
although not the previously established Automatic Investment Plans. If a
suspension of all sales is made, automatic investments will not be accepted
until the offering is recommenced. Participants in the Automatic Investment Plan
should not elect to receive dividends or other distributions from the Funds in
cash. A sales charge will be applied to each automatic monthly purchase of Class
A Fund shares in an amount determined in accordance with the Right of
Accumulation privilege described above. To participate in the Automatic
Investment Plan, investors should complete the appropriate portion of the
Supplemental Application provided at the end of this Prospectus. Investors
should contact their broker/dealers or GT 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
GT Global 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
GT 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 when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the GT Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. Investors
should be aware that the Emerging Markets Fund or Latin America Growth Fund may
suspend the offering of its shares in the future, although not for shareholders
who are participants in the Dollar Cost Averaging Program at that time. If a
suspension of all sales is made, the Funds will not accept Monthly Investments.
For more information about the GT Global Dollar Cost Averaging Program,
investors should consult their brokers or GT Global.
Prospectus Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of the Funds may be exchanged for shares of any other GT Global Mutual
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 GT Global
Mutual Fund shares to be acquired may be legally made. CLASS A SHARES MAY BE
EXCHANGED ONLY FOR CLASS A SHARES OF OTHER GT GLOBAL MUTUAL FUNDS. CLASS B
SHARES MAY BE EXCHANGED ONLY FOR CLASS B SHARES OF OTHER GT 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 MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR TAX PURPOSES. See "Dividends, Other Distributions and Federal Income
Taxation."
In addition to the Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL AMERICA GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE 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.
A shareholder interested in making an exchange should write or call his or her
broker or the Transfer Agent to request the prospectus of the other GT Global
Mutual Fund(s) being considered. Certain brokers may charge a fee for handling
exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's broker/ dealer or to the Transfer Agent by telephone at the
appropriate toll-free number provided in the Shareholder Account Manual.
Exchange orders will be accepted by telephone provided that the exchange
involves only uncertificated shares on deposit in the shareholder's account or
for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker 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 a Fund's or GT Global's
refusal to accept further purchase and exchange orders from the investor or
broker. The terms of the exchange offer described above may be modified at any
time, on 60 days' prior written notice to shareholders.
Prospectus Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
As described below, shares of the Funds 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 that 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 a Fund, the Class A shares will be redeemed first unless
the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
that sell shares of the Funds may submit redemption requests to such brokers.
Broker/Dealers may honor a redemption request either by repurchasing shares from
a redeeming shareholder at the shares' net asset value next computed after the
broker/ dealer receives the request or, as described below, by forwarding such
requests to the Transfer Agent (see "How to Redeem Shares -- Redemptions Through
the Transfer Agent"). Redemption proceeds (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 and any required supporting documentation (less any
applicable contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares). Redemption requests received before the close of
regular trading on the NYSE on any Business Day will be effected at the net
asset value calculated on that day. Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor. A shareholder uncertain about
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 on 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 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD. THE TRANSFER AGENT
AND THE FUND ARE NOT RESPONSIBLE FOR THE AUTHENTICITY OF TELEPHONE REDEMPTION
REQUESTS.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the 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 preceeding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares in the Funds with a value
of $10,000 or more may participate in the GT Global Systematic Withdrawal Plan.
A participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on certain
redemptions of Class A shares purchased for at least $500,000 without an initial
sales charge and Class B shares made under the Systematic Withdrawal Plan. The
minimum withdrawal amount is $100. The amount or percentage a participating
shareholder specifies 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 of the Fund may be disadvantageous to investors
because of the sales charges involved and possible tax implications, and
therefore is discouraged. In addition, shareholders who participate in the
Systematic Withdrawal Plan should not elect to reinvest dividends or other
distributions in additional Fund shares.
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 with questions concerning 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 a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
A Fund may redeem the shares of any shareholder whose account is reduced to less
than $500 in net asset value through redemptions or other action by the
shareholder. Notice will be given to the shareholder at least 60 days prior to
the date fixed for such redemption, during which time the shareholder may
increase his or her holdings to an aggregate amount of $500 or more (with a
minimum purchase of $100).
Prospectus Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 GT Global in accordance with this Manual. See "How to Invest;" "How to
Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other Distributions and
Federal Income Taxation -- Taxes" for more information.
Each Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
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 GT 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: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently, 4:00 p.m. Eastern time, unless weather, equipment failure
or other factors contribute to an earlier closing), each Business Day. Each
Fund's asset value per share is computed by determining the value of its total
assets (the securities it holds plus any cash or other assets, including
interest and dividends accrued but not yet received), subtracting all of its
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund are valued at the last sale price on the
exchange or in the OTC market in which such securities are primarily traded, as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid or asked prices for such
securities, or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when LGT Asset Management deems
it appropriate, prices obtained from a bond pricing service will be used.
Short-term debt investments are amortized to maturity based on their cost,
adjusted for foreign exchange translation and market fluctuations, provided that
such valuations represent fair value. When market quotations for futures and
options positions held by a Fund are readily available, those positions are
valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC markets which trade on days when the NYSE is closed
(such as Saturday). As a result, the net asset values of the Funds may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of the Fund.
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. The per share
net asset value of the Advisor Class shares of a Fund generally will be higher
than that of the Class A and Class B shares of that Fund because of the lower
expenses borne by the Advisor Class shares. It is expected, however, that the
net asset value per share of Class A and Class B shares of a Fund 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.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
its net investment income, if any, which includes dividends, accrued interest
and earned discount (including both original issue and market discounts) less
any applicable expenses. Each Fund also annually distributes 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
Prospectus Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
if necessary to avoid a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE REINVESTED AUTOMATICALLY IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX STATUS
OF DIVIDENDS AND OTHER DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN
CASH OR REINVESTED IN ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares, and whether paid in cash or reinvested in additional Fund
shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain
Prospectus Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
whether a proper taxpayer identification number is on file with a Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares of a Fund through a redemption
or exchange within 90 days after purchase and (2) subsequently acquires Class A
shares of such Fund or any other GT Global Mutual Fund on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when the shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if shares of a Fund are purchased within 30 days before or after
redeeming shares of that Fund (regardless of class) at a loss, all or a part of
the loss will not be deductible and instead will increase the basis of the newly
purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Funds. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by the Funds.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as each Fund's investment manager and administrator include, but are
not limited to, determining the composition of the Fund's portfolio and placing
orders to buy, sell or hold particular securities; furnishing corporate officers
and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
each of the Funds pays LGT Asset Management investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .975% on the first $500 million, .95% on
the next $500 million, .925% on the next $500 million, and .90% on amounts
thereafter. These rates are higher than those paid by most mutual funds. LGT
Asset Management and GT Global have undertaken to limit each Fund'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
Fund's Class A and Class B shares, respectively.
LGT Asset Management also serves as each Fund's pricing and accounting agent.
The monthly fee for these services to LGT Asset Management is a percentage, not
to exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of all GT
Global Mutual Funds and 0.02% to the assets in excess of $5 billion, and
allocating the result according to each Fund's average daily net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
Prospectus Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide asset management
affiliates managed or administered approximately $27 billion, of which
approximately $15 billion consist of GT Global retail funds worldwide. In the
U.S., as of December 31, 1995, LGT Asset Management managed or administered
approximately $10 billion in GT Global Mutual Funds. As of December 31, 1995,
assets under advice by the LGT Bank in Liechtenstein exceeded approximately $18
billion. As of December 31, 1995, assets entrusted to Liechtenstein Global Trust
totaled approximately $45 billion. Of this amount, more than $6 billion was
invested in emerging markets including the securities of Latin American issuers.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
The investment professionals primarily responsible for the portfolio management
of the Funds are as follows:
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- --------------------------- --------------------------------- ------------------------------------------------------
<S> <C> <C>
Jonathan Chew Portfolio Manager since Fund Portfolio Manager for LGT Asset Management since 1990;
Hong Kong inception in 1992 Portfolio Manager for LGT Asset Management Ltd. (Hong
Kong) since 1988.
James M. Bogin Portfolio Manager since 1993 Portfolio Manager for LGT Asset Management since 1993;
San Francisco From 1989 to 1993, Mr. Bogin was a Fund Manager at
Nomura Investment Management Co. (Tokyo).
John R. Legat Portfolio Manager since 1995 Portfolio Manager for LGT Asset Management and LGT
London Asset Management PLC (London).
</TABLE>
LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- --------------------------- --------------------------------- ------------------------------------------------------
<S> <C> <C>
Soraya M. Betterton Portfolio Manager since Fund Portfolio Manager for LGT Asset Management.
San Francisco inception in 1991
</TABLE>
In placing securities orders for the Funds' portfolio transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker-dealer. Commissions or
discounts in foreign securities exchanges or OTC markets often are fixed and
generally are higher than those in U.S. securities exchanges or markets. 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
Prospectus Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 the best net results, LGT Asset Management may consider a broker/dealer's
sale of shares of the GT Global Mutual Funds as a factor in considering through
whom portfolio transactions will be effected. Brokerage transactions may be
executed through any Liechtenstein Global Trust affiliate.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of each Fund's Class A and Class B shares. Like LGT Asset
Management, GT Global is a subsidiary of Liechtenstein Global Trust with offices
at 50 California Street, 27th Floor, San Francisco, California 94111. As
distributor, GT 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. GT 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, GT Global pays a commission equal to 4.00% of the amount invested to
broker/dealers who sell Class B shares. A commission with respect to Class B
shares is not paid on exchanges or certain reinvestments in Class B shares.
The Latin America Growth Fund has previously suspended the offering of its
shares upon the advice of LGT Asset Management that doing so was in the best
interests of the portfolio management process. As of the date of this
Prospectus, the Latin America Growth Fund has resumed sales of its shares based
upon LGT Asset Management's advice that it is consistent with prudent portfolio
management to do so. However, the Latin America Growth Fund reserves the right
to suspend sales again and Emerging Markets Fund reserves the right to suspend
sales in the future based upon the foregoing portfolio considerations.
GT Global, at its own expense, may provide additional promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other GT
Global Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to brokers/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/ or other events sponsored by the broker/dealers. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to the Fund's Class A
shares ("Class A Plan"), the Funds may each pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A Shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may each pay GT 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 its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under each Class A Plan will have
been incurred within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted by the Company's Board of
Directors with respect to the Fund's Class B shares ("Class B Plan"), each Fund
may pay GT Global a service fee at the annualized rate of up to 0.25% of the
average daily net assets of the Fund's Class B Shares for its expenditures
incurred in servicing and maintaining shareholder accounts, and may pay GT
Global a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B Shares for its expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
GT Global's service and distribution expenses under the Plans include the
payment of ongoing commissions; the cost of any additional compensation
Prospectus Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
paid by GT Global to brokers and dealers; the costs of printing and mailing to
prospective investors prospectuses and other materials relating to the Funds;
the costs of developing, printing, distributing and publishing advertisements
and other sales literature; and allocated costs relating to GT Global's service
and distribution activities, including, among other things, employee salaries,
bonuses and other overhead expenses. In addition, its expenses under each Class
B Plan include payment of initial sales commissions to broker/ dealers and
interest on any unreimbursed amounts carried forward thereunder. GT Global
expects that it will continue to incur certain of such service and distribution
expenses, including trail commission payments and other account servicing costs,
during any suspension of the offering of the Funds shares.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Funds. While the matter is not free from doubt, the Board of Directors
believes that such laws should not preclude a bank from providing administration
or shareholder servicing support or preclude a bank's affiliates from acting as
a broker/dealer. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank and its affiliates from
continuing to perform all or part of its servicing or broker/dealer activities.
If a bank were prohibited from so acting, its shareholder clients would be
permitted to remain shareholders, and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, such as an additional investment,
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to a Fund's
Automatic Investment Plan, Systematic Withdrawal Plan and automatic dividend
reinvestment program may be provided quarterly. Shortly after the end of the
Funds' fiscal year on October 31 and fiscal half-year on April 30 of each year,
shareholders will receive an annual and semiannual report, respectively. These
reports list the securities held by the relevant Fund(s) and include the Funds'
financial statements. Under certain circumstances, duplicate mailings of such
reports to the same household may be consolidated. In addition, the federal
income tax status of distributions made by the relevant Fund(s) to shareholders
will be reported after the end of the fiscal year on Form 1099-DIV.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
establish other funds, each corresponding to a distinct investment portfolio and
a distinct series of the Company's common stock. Shares of the Emerging Markets
Fund and the Latin America Growth Fund are entitled to one vote per share (with
proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's Funds will be voted in the aggregate on other matters, such as the
election of Directors
Prospectus Page 40
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
and ratification of the Board of Directors' selection of the Company's
independent accountants.
The Company normally will not hold annual meetings of shareholders, except as
required under the 1940 Act. The Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's Funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
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. One hundred million shares have been classified as Class A shares of
each Fund, one hundred million shares as Class B shares of each Fund, and one
hundred million shares have been classified as Advisor Class shares of each
Fund. This amount may be increased from time to time in the discretion of the
Board of Directors. Each share of the Fund represents an interest in that Fund
only, has a par value of $0.0001 per share, represents an equal proportionate
interest in the Fund with other shares of the Fund and is entitled to such
dividends and other distributions out of the income earned and gain realized on
the assets belonging to the Fund as may be declared at the discretion of the
Board of Directors. Each Class A, Class B and Advisor Class share of the Fund is
equal as to earnings, assets and voting privileges, except as noted above, and
each class bears the expenses, if any, related to the distribution of its
shares. Shares of the Fund when issued are fully paid and nonassessable.
Emerging Markets Fund is classified as a "diversified" fund under the 1940 Act
which means that, with respect to 75% of the Fund's total assets, no more than
5% will be invested in the securities of any one issuer, and the Fund will
purchase no more than 10% of the outstanding voting securities of any one
issuer.
The Latin America Growth Fund is classified as a "non-diversified" fund under
the 1940 Act which means that with respect to 50% of its total assets, no more
than 50% will be invested in the securities of any one issuer, and the Fund will
purchase no more than 10% of the outstanding voting securities of any one
issuer.
Because the Funds employ a Combined Prospectus, it is possible that a Fund might
become liable for a misstatement with respect to the other Fund in this Combined
Prospectus. The Board of Directors of the Company have considered this in
approving the use of a Combined Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date established by the
Board of Directors.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions.
Prospectus Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Non-Standardized Return may be quoted for the same or different periods as those
for which Standardized Return is quoted; it may consist of an aggregate or
average annual percentage rate of return, actual year-by-year rates or any
combination thereof. Non-Standardized Return may or may not take sales charges
into account; performance data calculated without taking the effect of sales
charges into account will be higher than data including the effect of such
charges.
Each Fund's performance data reflects past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible differences in calculation
methods should be considered when comparing a Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. A Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global and a
subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek,
California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Funds.
Kirkpatrick & Lockhart, LLP also acts as counsel to LGT Asset Management, GT
Global and GT Global Investor Services, Inc. in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P. will conduct an annual audit of each Fund,
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company, or Trust, as applicable, and each Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 42
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 43
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 44
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 45
<PAGE>
<TABLE>
<S> <C> <C>
[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR
MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION
/ / NEW ACCOUNT
/ / ACCOUNT REVISION (Account No.:
---------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ / Class B Shares (Not available for purchases of $500,000 or more or for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000
Transfer Agent of the GT Global Mutual Funds, to may be wired or mailed to a Pre-Designated Account
honor any telephone, telex or telegraphic at your bank. (Wiring instructions may be obtained
instructions reasonably believed to be authentic from your bank.) A bank wire service fee may be
for redemption and/or exchange between a similar charged.
class of shares of any of the Funds distributed
by GT Global, Inc. --------------------------------------------------
Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS
/ / I have completed and attached the --------------------------------------------------
Supplemental Application for: Bank Address
/ / AUTOMATIC INVESTMENT PLAN
/ / SYSTEMATIC WITHDRAWAL PLAN --------------------------------------------------
OTHER Bank A.B.A Number Account Number
/ / I/We owned shares of one or more Funds
distributed by GT Global, Inc. as of April --------------------------------------------------
30, 1987 and since that date continuously Names(s) in which Bank Account is Established
have owned shares of such Funds. Attached is A corporation (or partnership) must also submit a
a schedule showing the numbers of each of "Corporate Resolution"
my/our Shareholder Accounts. (or "Certificate of Partnership") indicating the
names and titles of Officers authorized to act on
its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER G.T. FUND ACCOUNTS:
<TABLE>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
</TABLE>
Account Numbers Account Registrations
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
------------------------------------------------------------------------------
Investment Dealer Name
------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's
Name
( )
------------------------------------------------------------------------------
Branch Address Telephone
X
------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
<PAGE>
<TABLE>
<S> <C> <C>
[LGT LOGO]
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 SUPPLEMENTAL APPLICATION
San Francisco, CA SPECIAL INVESTMENT AND
94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
[LOGO]
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C> <C>
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT
an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee
requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
G.T. GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT
FUNDS, INC., GT GLOBAL EMERGING MARKETS FUND, GT GLOBAL LATIN AMERICA GROWTH
FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
LEMPR602075MC
<PAGE>
GT GLOBAL THEME FUNDS:
ADVISOR CLASS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GT GLOBAL FINANCIAL SERVICES FUND GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
GT GLOBAL INFRASTRUCTURE FUND GT GLOBAL HEALTH CARE FUND
GT GLOBAL NATURAL RESOURCES FUND GT GLOBAL TELECOMMUNICATIONS FUND
</TABLE>
The GT GLOBAL HEALTH CARE FUND ("HEALTH CARE FUND") seeks its investment
objective of long-term capital appreciation by investing primarily in securities
of health care companies throughout the world.
The GT GLOBAL TELECOMMUNICATIONS FUND ("TELECOMMUNICATIONS FUND") seeks its
investment objective of long-term growth of capital by investing primarily in
securities of companies throughout the world engaged in development, manufacture
or sale of telecommunications services or equipment.
The GT GLOBAL FINANCIAL SERVICES FUND ("FINANCIAL SERVICES FUND"), GT GLOBAL
INFRASTRUCTURE FUND ("INFRASTRUCTURE FUND"), GT GLOBAL NATURAL RESOURCES FUND
("NATURAL RESOURCES FUND") and GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
("CONSUMER PRODUCTS AND SERVICES FUND") seek their investment objectives of
long-term capital growth by investing all of their investable assets in their
corresponding Portfolios, each of which invests in securities of companies
throughout the world that operate in their respective theme industries.
The Global Financial Services Portfolio ("Financial Services Portfolio") invests
primarily in securities of companies throughout the world that operate within
the financial services industries.
The Global Infrastructure Portfolio ("Infrastructure Portfolio") invests
primarily in securities of companies throughout the world that design, develop
or provide products and services significant to a country's infrastructure.
The Global Natural Resources Portfolio ("Natural Resources Portfolio") 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.
The Global Consumer Products and Services Portfolio ("Consumer Products and
Services Portfolio") invests primarily in securities of companies throughout the
world that manufacture, market, retail or distribute consumer products and
services.
Collectively, the above-named Funds are known as the "GT Global Theme Funds,"
and the Portfolios are known individually as a "Portfolio" and collectively as
the "Portfolios."
Each Portfolio's investment objective is identical to that of its corresponding
Fund. As this structure is different from many other investment companies which
directly acquire and manage their own portfolios, investors should carefully
consider this investment approach. For additional information on the Funds, the
Portfolios and the theme industries in which the GT Global Theme Funds invest,
see "Investment Objectives and Policies" and "Management."
There can be no assurance that any Fund or 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 Funds and the Portfolios are managed and/or administered by LGT Asset
Management, Inc. ("LGT Asset Management"). LGT Asset Management and its
worldwide affiliates are part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services to individual
and institutional investors.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission and, as supplemented or amended from
time to time, is incorporated by reference. The Statement of Additional
Information is available without charge by writing to the Funds at 50 California
Street, 27th Floor, San Francisco 94111, or by calling (800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL THEME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 9
Investment Objective and Policies......................................................... 15
Risk Factors.............................................................................. 23
How to Invest............................................................................. 31
How to Make Exchanges..................................................................... 32
How to Redeem Shares...................................................................... 33
Shareholder Account Manual................................................................ 35
Calculation of Net Asset Value............................................................ 36
Dividends, Other Distributions and Federal Income Taxation................................ 36
Management................................................................................ 38
Other Information......................................................................... 44
</TABLE>
Prospectus Page 2
<PAGE>
GT 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: Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund seek 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 equity 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
equity 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
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
Consumer Products and Services Fund invests 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
Health Care Fund invests primarily in equity securities of health
care companies throughout the world
Telecommunications Fund invests primarily in equity securities of
companies throughout the world engaged in development, manufacture
or sale of telecommunications services or equipment
Investment Manager: LGT Asset Management, part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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 1,000 employees; (b) any account with assets of at least
$25,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $25,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
by one of the companies comprising or affiliated with
Liechtenstein Global Trust; and (e) any of the companies
comprising or affiliated with Liechtenstein Global Trust
Exchange Privileges: Advisor Class shares of a Fund may only be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by LGT
Asset Management
Dividends and Other
Distributions: Dividends paid annually from net investment income and realized
net short-term capital gains; other distributions paid annually
from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the distributing Fund or in Advisor
Class shares of other GT Global Mutual Funds
Net Asset Values: Advisor Class shares of the Health Care Fund, Telecommunications
Fund, Infrastructure Fund, Financial Services Fund, Natural
Resources Fund and Consumer Products and Services Fund are
expected to be quoted daily in the financial section of most
newspapers
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comprising Liechtenstein Global Trust are indirect subsidiaries of the Prince of
Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVE AND POLICIES. The Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund seek
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."
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"). 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."
The Financial Services Fund seeks its investment 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. 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 companies throughout the world
that design, develop or provide products and services significant to a country's
infrastructure. 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 stocks and
warrants to acquire such securities issued by companies throughout the world
that own, explore or develop natural resources and other basic commodities, or
supply goods and services to such companies. 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
companies throughout the world that manufacture, market, retail or distribute
consumer products and services. See "Investment Objective and Policies."
The Health Care Fund seeks its investment objective by normally investing 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.
See "Investment Objective and Policies."
The Telecommunications Fund seeks its investment objective by normally investing
at least 65% of its total assets in common and preferred stocks and warrants to
acquire such securities issued by companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
See "Investment Objective and Policies."
The remainder of each of the foregoing Theme Portfolio's assets may be invested
in debt securities issued by companies in their respective industries and/or in
equity and debt securities of companies outside those industries, which, in the
opinion of
Prospectus Page 5
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
LGT Asset Management, stand to benefit from developments in those industries.
LGT Asset Management believes that a portfolio of securities of companies
operating in one of the industries described above located throughout the world
presents greater potential for long-term capital growth and appreciation than a
portfolio comprising solely 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. The Theme Portfolios' participation in the
currency, options and futures markets involves certain risks and transaction
costs.
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 Portfolio did not
borrow, but also may enable the Theme Portfolio to retain favorable securities
positions rather than liquidating such positions to meet redemption needs. Each
Theme Portfolio also is authorized to lend securities to broker/dealers or to
other institutional investors.
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 below investment grade debt securities, which may include
(i) corporate debt securities and (ii) debt instruments issued by governments.
Investments of this type are subject to a greater risk of loss of principal and
interest.
Each Theme Portfolio's policy of concentrating its investments in companies in
its particular industries may cause a Fund's net asset value to fluctuate more
than if it invested in a greater number of industries.
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.
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.
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 a particular Fund.
PURCHASES AND REDEMPTIONS. Advisor Class shares of each Fund's common stock are
available through Financial Advisors (as defined herein) who have entered into
agreements with the Fund's distributor, GT Global, Inc. ("GT Global") or certain
of its affiliates. See "How to Invest" and "Shareholder Account Manual." Shares
may be redeemed through the Funds' transfer agent, GT Global Investor Services,
Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Prospectus Page 6
<PAGE>
GT 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>
GT GLOBAL GT GLOBAL GT 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.......... 0.98% 0.93% 0.98%
12b-1 service and distribution expenses................ None None None
Other expenses (after reimbursements).................. 0.43% 0.40% 0.92%
------- ------- -------
Total Fund Operating Expenses.......................... 1.41% 1.33% 1.90%
------- ------- -------
------- ------- -------
<CAPTION>
GT GLOBAL GT GLOBAL GT 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.......... 0.98% 0.98% 0.98%
12b-1 service and distribution expenses................ None None None
Other expenses (after reimbursements).................. 0.92% 0.92% 0.92%
------- ------- -------
Total Fund Operating Expenses.......................... 1.90% 1.90% 1.90%
------- ------- -------
------- ------- -------
</TABLE>
Prospectus Page 7
<PAGE>
GT 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>
GT GLOBAL GT GLOBAL GT 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............... $13 $44 $ 98 $177 $13 $ 42 $ 93 $167 $ 18 $ 60 $125 $239
</TABLE>
<TABLE>
<CAPTION>
GT GLOBAL
GT GLOBAL GT 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............... $18 $60 $125 $239 $18 $ 60 $125 $239 $ 18 $ 60 $125 $239
</TABLE>
- --------------
* BECAUSE ADVISOR CLASS SHARES WERE NOT OFFERED PRIOR TO JUNE 1, 1995,
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, TELECOMMUNICATIONS FUND, FINANCIAL SERVICES FUND, INFRASTRUCTURE
FUND AND NATURAL RESOURCES FUND AND THEIR CORRESPONDING PORTFOLIOS, AND ARE
BASED ON THE FUNDS' FISCAL YEAR ENDED OCTOBER 31, 1995. 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. 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. See "Management" herein and 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 are estimated to be 0.98%,
7.67%, and 8.64% for Financial Services Fund and its corresponding
Portfolio, 0.98%, 1.15%, and 2.12% for Infrastructure Fund and its
corresponding Portfolio, 0.98%, 2.0%, and 2.97% for Natural Resources Fund
and its corresponding Portfolio, and 0.98%, 12.16% and 13.13% 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 Liechtenstein Global Trust 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.
Prospectus Page 8
<PAGE>
GT 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 each Fund for the
periods shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand, L.L.P., independent accountants, whose report
thereon is also included in the Statement of Additional Information.
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------
AUGUST 7,
1989
(COMMENCEMENT
OF
YEAR ENDED OCTOBER 31, OPERATIONS)
-------------------------------------------------------------- TO OCTOBER
1995* 1994* 1993* 1992 1991 1990 31, 1989
-------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83 $ 11.43
-------- -------- -------- -------- -------- -------- -------------
Income from investment
operations:
Net investment income
(loss)..................... (0.15) (0.22) (0.15) (0.18) 0.03 0.06 0.01
Net realized and unrealized
gain (loss) on
investments................ 3.73 2.02 0.57 (1.53) 6.78 0.97 0.39
-------- -------- -------- -------- -------- -------- -------------
Net increase (decrease) from
investment operations...... 3.58 1.80 0.42 (1.71) 6.81 1.03 0.40
-------- -------- -------- -------- -------- -------- -------------
Distributions:
Net investment income....... (0.00) (0.00) (0.00) (0.00) (0.07) (0.03) (0.00)
Net realized gain on
investments................ (1.34) (0.00) (0.00) (0.14) (0.28) (0.00) (0.00)
In excess of net realized
gain on investments........ (0.00) (0.06) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------------
Total distributions....... (1.34) (0.06) (0.00) (0.14) (0.35) (0.03) (0.00)
-------- -------- -------- -------- -------- -------- -------------
Net asset value, end of
period....................... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------- -------------
Total investment return (c)... 19.79% 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)................... $426,380 $438,940 $461,113 $655,867 $552,897 $145,544 $49,903
Ratio of net investment income
(loss) to average net
assets....................... (0.72)% (1.23)% (0.90)% (0.97)% 0.19% 0.66% 3.2%(b)
Ratio of expenses to average
net assets:
With expense reduction...... 1.85% 1.98% 2.0% 2.05% 2.01% 2.39% 2.5%(b)
Without expense reduction... 1.91% -%(d) -%(d) -%(d) -%(d) -%(d) -%(d)
Portfolio turnover rate +++... 99% 64% 61% 30% 23% 34% 183%(b)
<CAPTION>
ADVISOR
CLASS B++ CLASS**
----------------------------- ------------
YEAR ENDED APRIL 1, JUNE 1, 1995
OCTOBER 31, 1993 TO
---------------- TO OCTOBER OCTOBER 31,
1995* 1994* 31, 1993* 1995
------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 19.46 $ 17.80 $ 15.59 $ 18.66
------- ------- ----------- ------------
Income from investment
operations:
Net investment income
(loss)..................... (0.25) (0.32) (0.14) (0.02)
Net realized and unrealized
gain (loss) on
investments................ 3.69 2.02 2.35 3.24
------- ------- ----------- ------------
Net increase (decrease) from
investment operations...... 3.44 1.70 2.21 3.22
------- ------- ----------- ------------
Distributions:
Net investment income....... (0.00) (0.00) (0.00) 0.00
Net realized gain on
investments................ (1.34) (0.00) (0.00) 0.00
In excess of net realized
gain on investments........ (0.00) (0.04) (0.00) 0.00
------- ------- ----------- ------------
Total distributions....... (1.34) (0.04) (0.00) 0.00
------- ------- ----------- ------------
Net asset value, end of
period....................... $ 21.56 $ 19.46 $ 17.80 $ 21.88
------- ------- ----------- ------------
------- ------- ----------- ------------
Total investment return (c)... 19.17% 9.55% 14.2%(a) 17.10%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................... $70,740 $39,100 $ 8,604 $ 539
Ratio of net investment income
(loss) to average net
assets....................... (1.22)% (1.73)% (1.40)%(b) (0.22)%(b)
Ratio of expenses to average
net assets:
With expense reduction...... 2.35% 2.48% 2.54%(b) 1.35%(b)
Without expense reduction... 2.41% -% ) -%(d) 1.41%(b)
Portfolio turnover rate +++... 99% 64% 61% 99%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover 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.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratios of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
Prospectus Page 9
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------
<S> <C> <C> <C> <C>
JANUARY 27, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO
1995 1994(C) 1993 OCTOBER 31, 1992
---------- ---------- ---------- ----------------
Per Share Operating
Performance:
Net asset value, beginning
of period................. $ 17.80 $ 16.92 $ 11.16 $ 11.43
---------- ---------- ---------- ----------------
Income from investment
operations:
Net investment income
(loss).................. (0.09) (0.01) 0.08 0.14*
Net realized and
unrealized gain (loss)
on investments.......... (0.43) 1.17 5.83 (0.41)
---------- ---------- ---------- ----------------
Net increase (decrease)
from investment
operations.............. (0.52) 1.16 5.91 (0.27)
---------- ---------- ---------- ----------------
Distributions:
Net investment income.... (0.00) (0.01) (0.15) (0.00)
Net realized gain on
investments............. (0.86) (0.27) (0.00) (0.00)
---------- ---------- ---------- ----------------
Total distributions.... (0.86) (0.28) (0.15) (0.00)
---------- ---------- ---------- ----------------
Net asset value, end of
period.................... $ 16.42 $ 17.80 $ 16.92 $ 11.16
---------- ---------- ---------- ----------------
Total investment return
(d)....................... (2.88)% 7.02% 53.6% (2.4)%(a)
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................ $1,353,722 $1,644,402 $1,223,340 $442,862
Ratio of net investment
income to average net
assets.................... (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to
average net assets:
With expense
reductions.............. 1.77% 1.8% 2.0%(b) 2.3%*(b)
Without expense
reductions.............. 1.83% -%(e) -%(e) -%(e)
Portfolio turnover
rate+++................... 62% 57% 41% 4%(b)
<CAPTION>
CLASS B++ ADVISOR CLASS**
---------------------------------------- ----------------
<S> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, JUNE 1, 1995
---------------------- APRIL 1, 1993 TO TO
1995 1994(C) OCTOBER 31, 1993 OCTOBER 31, 1995
---------- ---------- ---------------- ----------------
Per Share Operating
Performance:
Net asset value, beginning
of period................. $ 17.66 $ 16.87 $ 12.68 $15.24
---------- ---------- ---------------- -------
Income from investment
operations:
Net investment income
(loss).................. (0.17) (0.10) 0.01 0.00
Net realized and
unrealized gain (loss)
on investments.......... (0.43) 1.17 4.18 1.22
---------- ---------- ---------------- -------
Net increase (decrease)
from investment
operations.............. (0.60) 1.07 4.19 1.22
---------- ---------- ---------------- -------
Distributions:
Net investment income.... (0.00) (0.01) (0.00) 0.00
Net realized gain on
investments............. (0.86) (0.27) (0.00) 0.00
---------- ---------- ---------------- -------
Total distributions.... (0.86) (0.28) (0.00) 0.00
---------- ---------- ---------------- -------
Net asset value, end of
period.................... $ 16.20 $ 17.66 $ 16.87 $16.46
---------- ---------- ---------------- -------
Total investment return
(d)....................... (3.37)% 6.50% 33.0%(a) 7.94%(a)
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................ $1,111,520 $1,184,081 $455,335 $ 681
Ratio of net investment
income to average net
assets.................... (0.99)% (0.52)% 0.3%(b) 0.01%(b)
Ratio of expenses to
average net assets:
With expense
reductions.............. 2.27% 2.3% 2.5%(b) 1.27%(b)
Without expense
reductions.............. 2.33% -%(e) -%(e) 1.33%(b)
Portfolio turnover
rate+++................... 62% 57% 41% 62%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management 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%.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 10
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
----------------------------- ----------------------------- ----------------
YEAR ENDED MAY 31, 1994 YEAR ENDED MAY 31, 1994 JUNE 1, 1995
OCTOBER COMMENCEMENT OF OCTOBER COMMENCEMENT OF TO
31, OPERATIONS) TO 31, OPERATIONS) TO OCTOBER 31,
1995(D) OCTOBER 31, 1994 1995(D) OCTOBER 31, 1994 1995
---------- ---------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.62 $ 11.43 $ 11.60 $ 11.43 $ 11.09
---------- -------- ---------- -------- --------
Income from investment operations:
Net investment income................. 0.17* 0.02* 0.11* 0.00* 0.09*
Net realized and unrealized gain on
investments.......................... 0.13 0.17 0.12 0.17 0.77
---------- -------- ---------- -------- --------
Net increase from investment
operations......................... 0.30 0.19 0.23 0.17 0.86
---------- -------- ---------- -------- --------
Net asset value, end of period.......... $ 11.92 $ 11.62 $ 11.83 $ 11.60 $ 11.95
---------- -------- ---------- -------- --------
---------- -------- ---------- -------- --------
Total investment return (b)............. 2.58% 1.66%(c) 1.98% 1.49%(c) 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,687 $ 3,175 $ 4,548 $ 2,235 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 1.46% 0.66%(a) 0.96% 0.16%(a) 1.96%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... (5.34)% (7.26)%(a) (5.84)% (7.76)%(a) (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 2.34% 2.40%(a) 2.84% 2.90%(a) 1.84%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... 9.14% 10.32%(a) 9.64% 10.82%(a) 8.64%(a)
</TABLE>
- ------------------
(a) Annualized.
(b) Total investment return does not include sales charges.
(c) Not annualized.
(d) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
* Before reimbursement by LGT Asset Management, the net investment income per
share would have been reduced by $0.59, $0.59 and $0.30 for Class A, Class
B, and Advisor Class, respectively, for the period ended October 31, 1995,
and $0.23 and $0.23 for Class A and Class B from May 31, 1994 to October 31,
1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Prospectus Page 11
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
----------------------------- ----------------------------- ----------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED COMMENCEMENT OF YEAR ENDED COMMENCEMENT OF TO
OCTOBER OPERATIONS) TO OCTOBER OPERATIONS) TO OCTOBER 31,
31, 1995 OCTOBER 31, 1994 31, 1995 OCTOBER 31, 1994 1995
---------- ---------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 11.43 $ 12.45 $ 11.43 $ 12.00
Income from investment operations:
---------- -------- ---------- -------- --------
Net investment income (loss).......... (0.03)* 0.01* (0.09)* (0.01)* 0.02*
Net realized and unrealized gain
(loss) on investments................ (0.33) 1.03 (0.33) 1.03 0.12
---------- -------- ---------- -------- --------
Net increase (decrease) from
investment operations.............. (0.36) 1.04 (0.42) 1.02 0.14
---------- -------- ---------- -------- --------
Net asset value, end of period.......... $ 12.11 $ 12.47 $ 12.03 $ 12.45 $ 12.14
---------- -------- ---------- -------- --------
---------- -------- ---------- -------- --------
Total investment return (c)............. (2.89)% 9.10%(b) (3.37)% 8.92%(b) 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $36,241 $23,615 $50,181 $30,954 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by LGT Asset
Management........................... (0.32)% 0.41%(a) (0.82)% (0.09)%(a) 0.18%(a)
Without expense reductions and
reimbursement by LGT Asset
Management........................... (0.58)% (0.47)%(a) (1.08)% (0.97)%(a) (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by LGT Asset
Management........................... 2.36% 2.40%(a) 2.86% 2.90%(a) 1.86%(a)
Without expense reductions and
reimbursement by LGT Asset
Management........................... 2.62% 3.28%(a) 3.12% 3.78%(a) 2.12%(a)
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by LGT Asset Management, the net investment income per
share would have been reduced by $0.03 for Class A shares, $0.03 for Class B
shares, and $0.02 for Advisor Class for the period ended October 31, 1995.
Net investment income per share would have been reduced by $0.02 for Class A
and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Prospectus Page 12
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------- ------------
MAY 31, 1994
YEAR ENDED COMMENCEMENT OF YEAR ENDED
OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995 OCTOBER 31, 1994 1995
------------ -------------------- ------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................... $ 12.41 $ 11.43 $ 12.38
------------ -------- ------------
Income from investment operations:
Net investment income (loss)............................... 0.04* 0.06* (0.02)*
Net realized and unrealized gain (loss) on investments..... (0.98) 0.92 (0.98)
------------ -------- ------------
Net increase (decrease) from investment operations....... (0.94) 0.98 (1.00)
------------ -------- ------------
Distributions to shareholders:
From net investment income................................. (0.03) 0.00 (0.02)
------------ -------- ------------
Total distributions...................................... (0.03) 0.00 (0.02)
------------ -------- ------------
Net asset value, end of period............................... $ 11.44 $ 12.41 $ 11.36
------------ -------- ------------
------------ -------- ------------
Total investment return (c).................................. (7.58)% 8.57%(b) (8.05)%
Ratios and supplemental data:
Net assets, end of period (in 000's)......................... $ 12,598 $ 14,797 $ 13,978
Ratio of net investment income (loss) to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 0.41% 2.63%(a) (0.09)%
Without expense reductions and reimbursement from LGT Asset
Management................................................ (0.69)% 0.65%(a) (1.19)%
Ratio of expenses to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 2.37% 2.40%(a) 2.87%
Without expense reductions and reimbursement from LGT Asset
Management................................................ 3.47% 4.38%(a) 3.97%
<CAPTION>
ADVISOR CLASS+
------------------
MAY 31, 1994 JUNE 1, 1995
COMMENCEMENT OF TO
OPERATIONS) TO OCTOBER 31,
OCTOBER 31, 1994 1995
-------------------- ------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................... $ 11.43 $ 11.45
-------- --------
Income from investment operations:
Net investment income (loss)............................... 0.03* 0.11*
Net realized and unrealized gain (loss) on investments..... 0.92 (0.09)
-------- --------
Net increase (decrease) from investment operations....... 0.95 0.02
-------- --------
Distributions to shareholders:
From net investment income................................. 0.00 0.00
-------- --------
Total distributions...................................... 0.00 0.00
-------- --------
Net asset value, end of period............................... $ 12.38 $ 11.47
-------- --------
-------- --------
Total investment return (c).................................. 8.31%(b) 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)......................... $ 13,404 $95
Ratio of net investment income (loss) to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 2.13%(a) 0.91%(a)
Without expense reductions and reimbursement from LGT Asset
Management................................................ 0.15%(a) (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 2.90%(a) 1.87%(a)
Without expense reductions and reimbursement from LGT Asset
Management................................................ 4.88%(a) 2.97%(a)
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by LGT Asset Management, the net investment income per
share would have been reduced by $0.14, $0.13 and $0.12 for Class A, Class
B, and Advisor Class, respectively, for the period ended October 31, 1995,
and $0.04 and $0.04 for Class A and Class B, respectively from May 31, 1994
to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Prospectus Page 13
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
------------------- ------------------- -------------------
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF (COMMENCEMENT OF JUNE 1, 1995
OPERATIONS) TO OPERATIONS) TO TO
OCTOBER 31, 1995* OCTOBER 31, 1995* OCTOBER 31, 1995*
------------------- ------------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................... $ 11.43 $ 11.43 $ 11.84
---------- ---------- ----------
Income from investment operations:
Net investment income........... 0.02** (0.04)** 0.04**
Net realized and unrealized gain
on investments................. 3.14 3.14 2.76
---------- ---------- ----------
Net increase from investment
operations..................... 3.16 3.10 2.80
---------- ---------- ----------
Net asset value, end of period.... $ 14.59 $ 14.53 $ 14.64
---------- ---------- ----------
---------- ---------- ----------
Total investment return (c)....... 27.65%(b) 27.12%(b) 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)........................... $ 4,082 $ 2,959 $ 164
Ratio of net investment income
(loss) to average net assets:
With expense reductions and
reimbursement by LGT Asset
Management..................... 0.20%(a) (0.30)%(a) 0.70%(a)
Without expense reductions and
reimbursement by LGT Asset
Management..................... (11.11)%(a) (11.61)%(a) (10.61)%(a)
Ratio of expenses to average net
assets:
With expense reductions and
reimbursement by LGT Asset
Management..................... 2.32%(a) 2.82%(a) 1.82%(a)
Without expense reductions and
reimbursement by LGT Asset
Management..................... 13.63%(a) 14.13%(a) 13.13%(a)
</TABLE>
- --------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Before reimbursement by LGT Asset Management, net investment income per
share would have been reduced by $1.12, $1.04 and $0.61, for Class A, Class
B, and Advisor Class, respectively.
Prospectus Page 14
<PAGE>
GT 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 industries. 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 LGT Asset Management, have potential for above average, long-term growth in
sales and earnings. 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 financial services companies. 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 industries, which, in
the opinion of LGT Asset Management, stand to benefit from developments in the
financial services industries.
In analyzing companies for possible investment by the Financial Services
Portfolio, LGT Asset Management 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 INDUSTRIES 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 banks; 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.
LGT Asset Management believes an accelerating rate of global economic
interdependence will lead to significant growth in the demand for financial
services. In addition, in LGT Asset Management's view, as the industries evolve,
opportunities will emerge for those companies positioned for the future. Thus,
LGT Asset Management 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 LGT Asset Management, have potential for
above average, long-term growth in sales and earnings. 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 and
Prospectus Page 15
<PAGE>
GT GLOBAL THEME FUNDS
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 LGT Asset Management,
stand to benefit from developments in the infrastructure industries.
In analyzing companies for possible investment by the Infrastructure Portfolio,
LGT Asset Management 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. Examples of infrastructure
companies include 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 LGT Asset Management's judgment, constitute
services significant to the development of a country's infrastructure.
LGT Asset Management believes that a country's infrastructure is one key to the
long-term success of that country's economy. LGT Asset Management believes that
adequate energy, transportation, water, and communications systems are essential
elements for long-term economic growth. LGT Asset Management 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, LGT Asset Management expects that the replacement and upgrade of
transportation and communications systems should stimulate growth in the
infrastructure industries of those countries. In addition, in LGT Asset
Management's view, deregulation of telecommunications and electric and gas
utilities in many countries is promoting significant changes in these
industries.
LGT Asset Management 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. In addition, the long-term
growth rates of certain foreign countries' economies may be substantially higher
than the long-term growth rate of the U.S. economy. An integral aspect of
certain foreign countries' economies may be the development or improvement of
their infrastructure.
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 invests in natural resource companies which, in the
opinion of LGT Asset Management, 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
Prospectus Page 16
<PAGE>
GT GLOBAL THEME FUNDS
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 LGT Asset
Management, stand to benefit from developments in the natural resource
industries.
The Natural Resources Portfolio may invest in securities of companies in natural
resource industries and commodity groups which, in LGT Asset Management's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Portfolio, LGT Asset
Management 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. Examples of natural resource
companies include 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 LGT Asset Management's
opinion are significant to the ownership and development of natural resources
and other basic commodities.
LGT Asset Management will allocate the Natural Resources Portfolio's investments
among natural resource companies depending on its assessment of their long-term
growth potential. In assessing these companies' long-term growth potential, LGT
Asset Management 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.
LGT Asset Management 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 is generating new demands for industrial materials
that are affecting world commodities markets. LGT Asset Management believes
these changes are likely to create investment opportunities that benefit from
new sources of supply and/or from changes in commodities prices.
LGT Asset Management 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. LGT Asset Management 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 LGT Asset Management, have potential
for above average, long-term growth in sales and earnings. 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 Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. 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
Prospectus Page 17
<PAGE>
GT GLOBAL THEME FUNDS
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 LGT Asset Management, stand to
benefit from developments in such industries.
In analyzing companies for possible investment by the Consumer Products and
Services Portfolio, LGT Asset Management 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.
GLOBAL CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. Examples of
consumer products and services companies include 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, LGT
Asset Management believes, may 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.
LGT Asset Management 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 LGT Asset Management's
view, these changes are likely to create investment opportunities in companies,
both local and multinational, 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 LGT Asset Management,
have potential for above average, long-term growth in sales and earnings. 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 either the revenues or earnings was derived from health care
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 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 LGT Asset Management, stand to benefit from
developments in the health care industries.
In analyzing companies for possible investment by the Health Care Fund, LGT
Asset Management 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 18
<PAGE>
GT GLOBAL THEME FUNDS
GLOBAL HEALTH CARE INDUSTRIES INVESTMENT. Examples of health care companies
include those 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
industries, however, are global industries with significant, growing markets
outside of the United States. A sizeable portion of the companies which comprise
the health care industries 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.
LGT Asset Management believes that the 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, LGT Asset Management 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
LGT Asset Management'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. LGT Asset Management 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 LGT Asset Management, 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 LGT Asset Management, stand to benefit from
developments in the telecommunications industry.
In analyzing companies for possible investment by the Telecommunications Fund,
LGT Asset Management 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 INDUSTRIES INVESTMENT. The telecommunications industry
is composed 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. LGT Asset Management will allocate the
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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 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
narrowcasting); 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.
LGT Asset Management 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 technologies 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, LGT Asset Management believes that a portfolio composed only
of securities of U.S. issuers does not provide the greatest potential for return
from a Theme Portfolio investment. LGT Asset Management uses its financial
expertise in markets located throughout the world and the substantial global
resources of Liechtenstein Global Trust in attempting to identify those
countries and companies then providing the greatest potential for long-term
capital appreciation. In this fashion, LGT Asset Management 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.
LGT Asset Management 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 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, the Health
Care Fund's and the Consumer Products and Services Portfolio's total assets.
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"). LGT Asset Management 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.
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, LGT Asset Management 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 invest up to 100% of its total assets in cash (U.S.
dollars, foreign currencies or multinational currency units) and/or high quality
debt securities or money market instruments
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issued by corporations, the U.S. or a foreign government. In addition, 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 not rated, determined
by LGT Asset Management 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, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. 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 may lend 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. Income received in
connection with securities lending may be used to offset each Theme Portfolio's
custody fees. Each Theme Portfolio limits its loans of portfolio securities to
an aggregate of 30% of the value of its total assets, measured at the time any
such loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The 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 purchase or sell when-issued
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GT GLOBAL THEME FUNDS
securities or enter into forward commitments only with the intention of actually
receiving or delivering the securities, as the case may be. No income accrues on
securities 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.
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." LGT Asset
Management 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 Services ("S&P") or Moody's Investors Service, Inc.
("Moody's") or deemed to be of equivalent quality in the judgment of LGT Asset
Management. See "Risk Factors -- Risks Associated with Debt Securities." 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 not rated, and are subject to a greater risk of loss of principal and
interest than those of securities rated BBB or above by S&P or Baa or above by
Moody's. The Theme Portfolios may also use instruments (including forward
contracts) often referred to as "derivatives." See "Options, Futures and Forward
Currency Transactions."
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RISK FACTORS
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THEME PORTFOLIOS -- GENERAL
Because of the focus of each Theme Portfolio on its industries, an investment in
each may be more volatile than that of other investment companies that do not
concentrate their investments in such a manner. Moreover, the value of the
shares of each Fund will be especially susceptible to factors affecting the
industries in which it focuses. No Fund should be considered as a complete
investment program.
FINANCIAL SERVICES FUND AND FINANCIAL SERVICES PORTFOLIO
The value of Financial Services Fund shares may be susceptible to factors
affecting the financial services industries. Financial services industries 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 may have an adverse effect on companies in these industries.
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 financial services industries 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 these industries, 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, have reported financial difficulties attributed to increased
competition, regulatory changes, and general economic difficulties.
The financial services area in the United States 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. 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 company 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.
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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 have reported liquidity or solvency
difficulties, or have experienced credit rating downgrades.
INFRASTRUCTURE FUND AND INFRASTRUCTURE PORTFOLIO
In the United States and foreign countries, infrastructure 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, and 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
In the United States and foreign countries, natural resource 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 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.
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CONSUMER PRODUCTS AND SERVICES FUND AND CONSUMER PRODUCTS AND SERVICES PORTFOLIO
General economic conditions significantly affect consumer products and services
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. The consumer products and services may also 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
Health care industries generally is subject to substantial government regulation
and approval of its products and services; 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 risks than funds investing
in a greater number of industries or issuers.
TELECOMMUNICATIONS FUND
Telecommunications industries 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 market share. In
recent years, these have been companies providing goods and services such as
private and local area networks and telephone set equipment.
FOREIGN INVESTING. 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,
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rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Each Theme Portfolio may invest in issuers domiciled in "emerging markets,"
I.E., those countries determined by LGT Asset Management to have developing or
emerging economies and markets. Emerging market investing 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.
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.
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 Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or 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 for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. 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. Lower quality debt 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 lower quality 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
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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 may be subordinated to the claims of 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. A Theme Portfolio 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 portfolio holdings, and the Theme Portfolio may have
limited legal recourse in the event of a default.
LGT Asset Management 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.
LGT Asset Management 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, LGT Asset Management 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 with a similar theme investing solely
in the securities of U.S. companies.
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.,
Prospectus Page 27
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GT GLOBAL THEME FUNDS
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 LGT Asset Management 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 LGT Asset Management 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 LGT Asset Management
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 a specific market sector, 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 a specific 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 Internal Revenue Code of 1986, as amended
("Code"), limit the extent to which a Theme Portfolio may enter into forward
contracts, 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 LGT Asset Management'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
Prospectus Page 28
<PAGE>
GT GLOBAL THEME FUNDS
Theme Portfolio to maintain "cover" or to set aside 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 LGT Asset Management 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.
OTHER INFORMATION. The portfolio turnover rate for the fiscal year ended October
31, 1995 was 99% for the Health Care Fund, 170% for the Financial Services
Portfolio, and 240% for the Consumer Products and Services Portfolio. See the
sub-caption "Portfolio Trading and Turnover" in the Statement of Additional
Information. High portfolio turnover (over 100%) involves correspondingly
greater transaction costs in the form of dealer spreads or brokerage commissions
and other costs that a Fund will bear directly, and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders.
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. Because 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. LGT Asset Management and GT Global have
sponsored traditionally structured funds, and, therefore, have
Prospectus Page 29
<PAGE>
GT GLOBAL THEME FUNDS
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 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.
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 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 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 30
<PAGE>
GT 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 1,000 employees; (b) any
account with assets of at least $25,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $25,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies comprising or affiliated with Liechtenstein
Global Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Fiduciaries and Financial Advisors may be
required to provide information satisfactory to GT Global concerning their
eligibility to purchase Advisor Class shares. Investors in Wrap Fee Accounts and
Advisory Accounts may only purchase Advisor Class shares through Financial
Advisors who have entered into agreements with GT Global or certain of its
affiliates. Investors may be charged a fee by their agents or brokers if they
effect transactions other than through a dealer.
Orders received by GT Global before the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on any
Business Day will be executed at the public offering price for the applicable
class of shares determined that day. A "Business Day" is any day Monday through
Friday on which the NYSE is open for business. All purchase orders will be
executed at the public offering price next determined after the purchase order
is received. The Funds and GT Global reserve the right to reject any purchase
order and to suspend the offering of shares for a period of time.
For more information on how to purchase shares, please contact your Financial
Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. 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 GT GLOBAL RECOMMEND THAT SHAREHOLDERS DO
NOT REQUEST ISSUANCE OF CERTIFICATES.
Prospectus Page 31
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GT GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
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Advisor Class shares of any Fund may only be exchanged for Advisor Class shares
of the other GT 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 GT 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." In
addition to the Theme Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL AMERICA GROWTH FUND
-- GTGLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL DOLLAR FUND
- --------------
* Formerly the G.T. Latin America 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 exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. The Funds may be liable for any
losses due to unauthorized or fraudulent instructions if they do not follow
reasonable procedures.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectus of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT 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 GT 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 32
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GT GLOBAL THEME FUNDS
HOW TO REDEEM SHARES
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Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. 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, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. 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 doubt as to what documents are required should contact
his or her Financial Advisor.
Prospectus Page 33
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GT 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.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 34
<PAGE>
GT GLOBAL THEME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders may be placed in accordance with this
Manual. 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 GT 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:
GT 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 GT
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: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT 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 GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT 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:
GT 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 GT Global at 1-800-223-2138.
Prospectus Page 35
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GT GLOBAL THEME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time), each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund is the
value of each such Fund's investment in its corresponding Portfolio),
subtracting all of its 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 over-the-counter market in which such securities are
primarily traded, as of the close of business on the day the securities are
being valued, or, lacking any sales, at the last available bid price. Long-term
debt obligations are valued at the mean of representative quoted bid 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 LGT Asset
Management 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 are valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolios' Board of
Trustees, as applicable. Securities and other assets quoted in foreign
currencies are valued in U.S. dollars based on the prevailing exchange rates on
that day.
Certain of the 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 annually distributes 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 36
<PAGE>
GT GLOBAL THEME FUNDS
shares of the distributing Fund (or other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE DISTRIBUTING FUND.
Reinvestments in another GT Global Mutual Fund may only be directed to an
account with the identical shareholder registration and account number. These
elections may be changed by a shareholder at any time; to be effective with
respect to a distribution, the shareholder or the shareholder's broker must
contact the Transfer Agent by mail or telephone at least 15 Business Days prior
to the payment date. THE FEDERAL INCOME TAX STATUS OF DIVIDENDS AND OTHER
DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders. 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 GT Global Mutual Fund (including another 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 37
<PAGE>
GT 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 and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolios,
respectively, and have approved contracts with various financial organizations
to provide certain services required by each Fund. 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 for the
Portfolios.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management 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, LGT Asset Management 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 LGT Asset Management
administration fees computed daily and payable monthly at the annualized rate of
0.25% of such Fund's average daily net assets. In addition, each such Fund bears
its pro rata portion of the investment management and administration fees paid
by its corresponding Portfolio to LGT Asset Management. 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 LGT Asset Management 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 LGT Asset Management 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. LGT Asset Management has
undertaken to limit expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the annual rate of 1.90% of the average
daily net assets of each Fund's Advisor Class shares.
LGT Asset Management also serves as each Theme Portfolio's pricing and
accounting agent. The monthly fee for these services to LGT Asset Management is
a percentage, not to exceed 0.03% annually, of the Fund's average daily net
assets. The annual fee rate is derived by applying 0.03% to the first $5 billion
of assets of GT Global Mutual Funds and 0.02% to the assets in excess of $5
billion, and allocating the result according to each Fund's average daily net
assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
Prospectus Page 38
<PAGE>
GT GLOBAL THEME FUNDS
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consists
of GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
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>
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for LGT Management
San Francisco since 1995. Analyst for LGT Asset
Management from 1994 to 1995. 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.
</TABLE>
Prospectus Page 39
<PAGE>
GT 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 Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management 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 Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1993. From 1991 to
1993, Mr. Mahoney was an Investment
Analyst for LGT Asset Management.
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>
Derek H. Webb Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1994. Analyst for
LGT Asset Management from 1992 to
1994. From 1990 to 1992, Mr. Webb was
a student at 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 40
<PAGE>
GT 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 Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1994. Analyst for
LGT Asset Management from 1992 to
1994. From 1990 to 1992, Mr. Webb was
a student at 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).
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 LGT Asset
San Francisco in 1989 Management.
Michael Yellen Research Analyst since 1994 Research analyst for LGT Asset
San Francisco Management since 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 41
<PAGE>
GT 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 LGT Asset
San Francisco Management since 1993. From 1991 to
1993, Mr. Mahoney was an Investment
Analyst for LGT Asset Management.
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 Portfolio Manager since 1993 Portfolio Manager for LGT Asset
San Francisco Management 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).
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for LGT Management
San Francisco since 1995. Analyst for LGT Asset
Management from 1994 to 1995. 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.
</TABLE>
Prospectus Page 42
<PAGE>
GT GLOBAL THEME FUNDS
In placing orders for the Theme Portfolios' securities transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker-dealer. Commissions or
discounts in foreign securities exchanges and 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
governmental 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
occassion, 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 the best net results, LGT Asset Management may consider a broker/
dealer's sale of shares of the GT Global Mutual Funds as a factor in considering
through whom portfolio transactions will be effected. Brokerage transactions for
the Fund may be executed through any Liechtenstein Global Trust affiliates.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of the Funds' Advisor Class shares. Like LGT Asset Management, GT
Global is a subsidiary of Liechtenstein Global Trust with offices at 50
California Street, 27th Floor, San Francisco, CA 94111.
LGT Asset Management or an affiliate thereof may make ongoing payments to
Financial Advisors and others that facilitate the administration and servicing
of Advisor Class shareholder accounts.
GT Global, at its own expense, may also provide promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other GT
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 GT 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, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
Prospectus Page 43
<PAGE>
GT 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. Under certain circumstances, duplicate
mailings of such reports to the same household may be consolidated.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
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, 1995, 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, 1.91% for Health Care Fund, 1.83% for Telecommunications Fund,
and 2.40% 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,
Prospectus Page 44
<PAGE>
GT GLOBAL THEME FUNDS
1995, total operating expenses for the Class B shares were 2.90% for Financial
Services Fund, 2.90% for Infrastructure Fund, 2.90% for Natural Resources Fund,
2.41% for Health Care Fund, 2.33% for Telecommunications Fund, and 2.90% for
Consumer Products and Services 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.
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. Shares for which no voting
instructions are received will be voted in the same proportion as the shares for
which voting instructions are received. Any information received from the
Financial Services Portfolio, Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio in the Portfolio's report
will be provided to the shareholders of its corresponding Fund.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Funds at P.O. Box 7893, San
Francisco, CA 94120-7893.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their 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
Prospectus Page 45
<PAGE>
GT GLOBAL THEME FUNDS
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
their portfolios and their operating expenses. These factors and possible
differences in calculation methods should be considered when comparing a Fund's
investment results with those published for other investment companies, other
investment vehicles and unmanaged indices. Each Fund's results also should be
considered relative to the risks associated with its investment objective and
policies. See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global, a
subsidiary of Liechtenstein Global Trust and maintains offices at California
Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the assets of the Portfolios, Health Care
Fund and Telecommunications Fund.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and to the
Theme Portfolios. Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset
Management, GT Global and the Transfer Agent 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>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 47
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 48
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 49
<PAGE>
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ADVISOR CLASS
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
[LGT LOGO]
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for
Uniform Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under
which the custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $500 minimum initial investment for each Fund is required. Checks should be made payable to "GT GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 413 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
405 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 424 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
416 / / GT GLOBAL EMERGING MARKETS FUND $ 406 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
411 / / GT GLOBAL HEALTH CARE FUND $ 423 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
415 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 404 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / GT GLOBAL INFRASTRUCTURE FUND $ 410 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / GT GLOBAL FINANCIAL SERVICES FUND $ 409 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / GT GLOBAL NATURAL RESOURCES FUND $ 408 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / GT GLOBAL CONSUMER PRODUCTS $ 418 / / GT GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
402 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 401 / / GT GLOBAL DOLLAR FUND $
---------- ----------
403 / / GT GLOBAL EUROPE GROWTH FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND
I/WE AGREE TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS'
TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC
INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH LOSS OR
DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE INVESTOR(S)
CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS
AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL GT GLOBAL, INC., G.T.
GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS,
INC. OR THE FUNDS' TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR
REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME
CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE
GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name
- ------------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the GT Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
GT Global, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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., GT GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, GT GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, GT GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, GT GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
GT GLOBAL HEALTH CARE FUND, GT GLOBAL TELECOMMUNICATIONS FUND, LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON IN SUCH JURISDICTION TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THEPV60206.5MC
<PAGE>
GT GLOBAL INCOME FUNDS:
ADVISOR CLASS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
GT GLOBAL GOVERNMENT INCOME FUND ("GOVERNMENT INCOME FUND") seeks a high level
of current income by investing primarily in high quality U.S. and foreign
government securities. The Fund's secondary objectives are capital appreciation
and protection of principal through active management of the maturity structure
and currency exposure of its portfolio.
GT GLOBAL STRATEGIC INCOME FUND ("STRATEGIC INCOME FUND") primarily seeks high
current income and secondarily seeks capital appreciation. The Fund allocates
its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets.
GT GLOBAL HIGH INCOME FUND ("HIGH INCOME FUND") primarily seeks high current
income and secondarily seeks capital appreciation. THE FUND, UNLIKE MANY OTHER
INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF
SECURITIES, SEEKS ITS INVESTMENT OBJECTIVES BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN THE GLOBAL HIGH INCOME PORTFOLIO ("PORTFOLIO"), WHICH IN TURN, INVESTS
IN THE DEBT SECURITIES OF ISSUERS LOCATED IN EMERGING MARKETS. THE PORTFOLIO'S
INVESTMENT OBJECTIVES ARE IDENTICAL TO THOSE OF THE FUND. AS THIS STRUCTURE IS
DIFFERENT FROM MANY OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR
OWN PORTFOLIOS, INVESTORS SHOULD CAREFULLY CONSIDER THIS INVESTMENT APPROACH.
FOR ADDITIONAL INFORMATION, SEE "INVESTMENT OBJECTIVES AND POLICIES -- HIGH
INCOME FUND."
There can be no assurance that any Fund or the Portfolio will achieve their
investment objectives.
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 Government Income Fund, the Strategic Income Fund and the High Income Fund
(individually, a "Fund," collectively, the "Funds") are organized as
non-diversified series of G.T. Investment Funds, Inc. Both the Funds and the
Portfolio are managed and/or administered by LGT Asset Management, Inc. ("LGT
Asset Management"). LGT Asset Management and its worldwide affiliates are part
of the Liechtenstein Global Trust, a global provider of asset management and
private banking products and services to individual and institutional investors.
The Funds are designed for long-term investors and not as trading vehicles, do
not represent a complete investment program and are not suitable for all
investors. An investment in any of the Funds involves risk factors that should
be reviewed carefully by potential investors. The Strategic Income Fund and the
Portfolio both are authorized to borrow money for investment purposes, which
would increase the volatility of their performance and involves additional
risks. See "Investment Objectives and Policies" and "Risk Factors."
THE STRATEGIC INCOME FUND INVESTS UP TO 50% OF ITS TOTAL ASSETS AND THE GLOBAL
HIGH INCOME PORTFOLIO INVESTS UP TO 100% OF ITS TOTAL ASSETS IN LOWER QUALITY
AND UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY
CONSIDERED THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS
"JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THESE FUNDS. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND
"RISK FACTORS".
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated
herein by reference. The Statement of Additional Information, which may be
amended or supplemented from time to time, is available without charge by
writing to the Funds at 50 California Street, 27th Floor, San Francisco,
California 94111, or by calling (800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL INCOME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 7
Investment Objectives and Policies........................................................ 12
Risk Factors.............................................................................. 23
How To Invest............................................................................. 28
How To Make Exchanges..................................................................... 29
How to Redeem Shares...................................................................... 30
Shareholder Account Manual................................................................ 32
Calculation of Net Asset Value............................................................ 33
Dividends, Other Distributions and Federal Income Taxation................................ 33
Management................................................................................ 35
Other Information......................................................................... 38
Appendix A -- Description of Debt Ratings................................................. 41
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL INCOME 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 Objectives and
Principal Investments:
Government Income Fund: Primarily seeks high current income and secondarily seeks capital
appreciation and protection of principal; invests primarily in
U.S. and foreign government obligations
Strategic Income Fund: Primarily seeks high current income and secondarily seeks capital
appreciation; allocates its assets among debt securities of
issuers in: (1) the United States; (2) developed foreign
countries; and (3) emerging markets, and selects particular
securities in each sector based on their relative investment merit
High Income Fund: Primarily seeks high current income and secondarily seeks capital
appreciation by investing all of its investable assets in the High
Income Portfolio, which, in turn, invests primarily in debt
securities of issuers located in emerging markets
Investment Manager and Ad- LGT Asset Management is part of the Liechtenstein Global Trust, a
ministrator: provider of global asset management and private banking products
and services to individual and institutional investors entrusted
with approximately $45 billion in total assets
Advisor Class shares are offered through a separate Prospectus to
Advisor Class Shares: (a) trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least
$25,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $25,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies comprising or affiliated with Liechtenstein Global
Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust
Exchange Privileges: Advisor Class shares of one Fund may only be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by LGT
Asset Management
Dividends and Other Distribu- Dividends paid monthly from net investment income and net
tions: short-term capital gains; other distributions paid annually from
realized net capital gain and net realized gains from foreign
currency transactions, if any
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Reinvestment: Dividends and distributions may be reinvested in Advisor Class
shares of the distributing Fund or of other GT Global Mutual Funds
Net Asset Values: Advisor Class shares are expected to be quoted daily in the
financial section of most newspapers
</TABLE>
------------------------
INVESTMENT MANAGER. LGT Asset Management is the investment manager and
administrator for the Government Income Fund, the Strategic Income Fund and the
Portfolio and the administrator for the High Income Fund. LGT Asset Management
and its worldwide asset management affiliates maintain fully-staffed investment
offices in San Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and
Frankfurt. LGT Asset Management is part of Liechtenstein Global Trust, a
provider of global asset management and private banking products and services to
individual and institutional investors. As of December 31, 1995, total assets
entrusted to Liechtenstein Global Trust totaled approximately $45 billion. The
companies comprising Liechtenstein Global Trust are indirect subsidiaries of the
Prince of Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVES AND POLICIES. Each Fund is organized as a non-diversified
series of G.T. Investment Funds, Inc. ("Company"), a registered open-end
management investment company. Under normal circumstances, the Government Income
Fund invests at least 65% of its total assets in securities issued or guaranteed
by the U.S. or foreign governments, their agencies, authorities and
instrumentalities, and may invest up to 35% of its total assets in investment
grade foreign government securities, investment grade debt securities of U.S. or
foreign issuers and common and preferred stocks and warrants to acquire such
securities. The Fund currently expects to choose its investments principally
from the obligations of issuers located in the United States, Canada, Japan, the
Western European nations, New Zealand and Australia. See "Investment Objectives
and Policies."
The Strategic Income Fund seeks its investment objective by investing primarily
in debt obligations allocated among diverse international markets and
denominated in both U.S. and foreign currencies. The Fund normally invests at
least 50% of its total assets in U.S. and foreign debt and other fixed income
securities that, at the time of purchase, are rated investment grade or, if not
rated, determined by LGT Asset Management to be of comparable quality. No more
than 50% of the Fund's total assets may be invested in U.S. and foreign debt and
other fixed income securities that are rated lower than investment grade. The
Fund allocates its assets among debt securities of issuers located in: (1) the
United States; (2) developed foreign countries; and (3) emerging markets. See
"Investment Objectives and Policies."
The High Income Fund seeks its investment objectives by investing all of its
investable assets in the Portfolio, which normally invests at least 65% of its
total assets in debt securities of issuers located in emerging markets. The
Portfolio may invest in bonds, notes and debentures of emerging market
governments as well as debt securities issued or guaranteed by such governments'
agencies or instrumentalities, by the central banks of emerging market countries
or by banks or other companies in such countries. See "Investment Objectives and
Policies."
INVESTMENT TECHNIQUES AND RISK FACTORS. There is no assurance that any Fund or
the Portfolio will achieve its investment objectives. Each Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its
portfolio positions. The value of the debt securities held by each Fund and the
Portfolio generally fluctuates inversely with interest rate movements based on:
(1) changes in the actual and perceived creditworthiness of the
Prospectus Page 4
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
issuers of such securities; and (2) based on changes in foreign currency
exchange rates.
The Government Income Fund, the Strategic Income Fund and the Portfolio have
high portfolio turnover rates. See "Investment Objectives and Policies -- Other
Information."
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. Changes in foreign currency exchange
rates may affect a Fund's net asset value, earnings and gains
and losses realized on sales of securities. Some foreign currency values may be
volatile and it is possible that a government will intervene in the currency
markets or impose controls on currency exchanges. Securities of foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. The participation by the Government
Income Fund, the Strategic Income Fund and the Portfolio in currency, options
and futures markets involves certain risks and transaction costs. Because of the
special risks associated with investing in emerging markets and with borrowing
for investment purposes, an investment in the Strategic Income Fund and the High
Income Fund should be considered speculative.
Many of the debt obligations purchased by the Strategic Income Fund and most of
the debt obligations purchased by the Portfolio are the equivalent of high
yield, high risk bonds. Investment by the Strategic Income Fund and the
Portfolio in debt securities rated below investment grade involves a high degree
of risk. Such investments are considered speculative by nationally recognized
statistical rating organizations ("NRSROs"). See "Risk Factors."
PURCHASES AND REDEMPTIONS. Advisor Class shares of each Fund's common stock are
available through Financial Advisors (as defined herein) that have entered into
agreements with the Funds' distributor, GT Global, Inc. ("GT Global") or certain
of its affiliates. See "How to Invest" and "Shareholder Account Manual." Shares
may be redeemed through the Funds' transfer agent, GT Global Investor Services,
Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Prospectus Page 5
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of each Fund, the annual operating
expenses for the Government Income Fund, and the Strategic Income Fund, and the
aggregate annual operating expenses for the High Income Fund and the Portfolio
are reflected in the following tables:*
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC IN- HIGH INCOME
INCOME FUND COME FUND FUND
--------------- --------------- ---------------
ADVISOR CLASS ADVISOR CLASS ADVISOR CLASS
--------------- --------------- ---------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering
price)................................................................ None None None
Sales charges on reinvested distributions to shareholders............... None None None
Maximum contingent deferred sales charge................................ 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........................... 0.72% 0.72% 0.73%
12b-1 service and distribution expenses................................. None None None
Other expenses.......................................................... 0.31% 0.38% 0.68%
------- ------- -------
Total Fund Operating Expenses........................................... 1.03% 1.10% 1.41%
------- ------- -------
------- ------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor directly or indirectly would have paid the following expenses at the
end of the periods shown on a $1,000 investment, assuming a 5% annual return*:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
----- ------ ----- -----
<S> <C> <C> <C> <C>
Government Income Fund
Advisor Class Shares...................................... $ 10 $ 32 $ 77 $ 130
Strategic Income Fund
Advisor Class Shares...................................... $ 10 $ 35 $ 81 $ 138
High Income Fund
Advisor Class Shares...................................... $ 13 $ 44 $ 97 $ 176
</TABLE>
- --------------
* BECAUSE ADVISOR CLASS SHARES WERE NOT OFFERED PRIOR TO JUNE 1, 1995,
EXPENSES ARE ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES.
SUCH DATA ARE DERIVED FROM CLASS A AND CLASS B EXPENSES FOR THE FUND BASED
ON THE FUND'S FISCAL YEAR ENDED OCTOBER 31, 1995. THESE TABLES ARE INTENDED
TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS COSTS AND EXPENSES
ASSOCIATED WITH INVESTING IN A FUND. "Other expenses" include custody,
transfer agent, legal, audit and other operating expenses. See "Management"
herein and in the Statement of Additional Information for more information.
Investors purchasing Advisor Class shares through financial planners, trust
companies, bank trust departments or registered investment advisers, or
under a "wrap fee" program, will be subject to additional fees charged by
such entities or by the sponsors of such programs. Where any account advised
by one of the companies comprising or affiliated with Liechtenstein Global
Trust 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; EACH FUND'S ACTUAL
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The above table and the
assumption in the Hypothetical Example of a 5% annual return are required by
regulation of the Securities and Exchange Commission applicable to all
mutual funds; the 5% annual return is not a prediction of and does not
represent the Fund's projected or actual performance. The Board of Directors
of the Company believes that the aggregate per share expenses of the High
Income Fund and the Portfolio will be less than or approximately equal to
the expenses which the Fund would incur if the assets of that Fund were
invested directly in the type of securities being held by the Portfolio.
Prospectus Page 6
<PAGE>
GT GLOBAL INCOME FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed information concerning income and capital
changes for one share of each class of shares of the Government Income Fund, the
Strategic Income Fund, and the High Income Fund for the periods shown. For the
period March 29, 1988 (commencement of operations) to October 21, 1992, the
Strategic Income Fund was named G.T. Global Bond Fund and operated under
different investment objectives, policies and limitations. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
fiscal year ended October 31, 1995 and each of the preceding four years have
been audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon also is included in the Statement of Additional Information.
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------
1995(C) 1994(C) 1993(C) 1992 1991 1990
---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45
---------- ------------ ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income................. 0.62 0.65 0.74 0.92 0.99 1.18
Net realized and unrealized gain
(loss) on investments................ 0.15 (1.52) 1.34 (0.31) (0.07) (0.02)
---------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease) from
investment operations.............. 0.77 (0.87) 2.08 0.61 0.92 1.16
---------- ------------ ------------ ------------ ------------ ------------
Distributions:
Net investment income................. (0.59) (0.65) (0.74) (0.83) (1.00) (1.15)
Net realized gain on investments...... (0.00) (0.27) (0.00) (0.13) (0.09) (0.00)
In excess of net realized gain on
investments.......................... (0.00) (0.55) (0.00) (0.00) (0.00) (0.00)
Return of capital..................... (0.00) (0.10) (0.00) (0.00) (0.00) (0.00)
Sources other than net investment
income............................... (0.00) (0.00) (0.10) (0.11) (0.00) (0.00)
---------- ------------ ------------ ------------ ------------ ------------
Total distributions................. (0.59) (1.57) (0.84) (1.07) (1.09) (1.15)
---------- ------------ ------------ ------------ ------------ ------------
Net asset value, end of period.......... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46
---------- ------------ ------------ ------------ ------------ ------------
---------- ------------ ------------ ------------ ------------ ------------
Total investment return (d)............. 9.22% (8.87)% 21.9% 6.3% 9.4% 11.9%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $385,404 $502,094 $708,301 $623,387 $399,200 $259,726
Ratio of net investment income to
average
net assets............................. 6.98% 6.87% 7.1% 9.0% 9.5% 11.4%
Ratio of expenses to average net assets:
With expense reductions............... 1.35% 1.33% 1.4% 1.6% 1.6% 1.8%
Without expense reductions............ 1.38% --%** --%** --%** --%** --%**
Portfolio turnover rate ++++............ 385% 625% 495% 351% 326% 334%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ On June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Net of $0.01 per share of Fund operating expenses reimbursed by LGT Asset
Management.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(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.
Prospectus Page 7
<PAGE>
GT GLOBAL INCOME FUNDS
GOVERNMENT INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+ CLASS B++
----------------------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MAR. 29, 1988
YEAR ENDED (COMMENCE- OCT. 22,
OCT. 31, MENT OF YEAR ENDED OCTOBER 31, 1992 TO
------------ OPERATIONS) TO ---------------------------------------- OCT. 31,
1989 OCT. 31, 1988 1995(C) 1994(C) 1993(C) 1992
------------ -------------- ---------- ------------ ------------ ------------
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 10.86 $ 11.43 $ 8.64 $ 11.07 $ 9.83 $ 9.87
------------ -------------- ---------- ------------ ------------ ------------
Income from investment operations:
Net investment income................. 1.15 0.49* 0.55 0.59 0.67 0.02
Net realized and unrealized gain
(loss) on investments................ (0.35) (0.44) 0.14 (1.52) 1.34 (0.06)
------------ -------------- ---------- ------------ ------------ ------------
Net increase (decrease) from
investment operations.............. 0.80 0.05 0.69 (0.93) 2.01 (0.04)
------------ -------------- ---------- ------------ ------------ ------------
Distributions:
Net investment income................. (1.20) (0.49) (0.53) (0.59) (0.67) (0.00)
Net realized gain on
investments.......................... (0.00) (0.12) (0.00) (0.27) (0.00) (0.00)
In excess of net realized gain on
investments.......................... (0.00) (0.00) (0.00) (0.54) (0.00) (0.00)
Return of capital..................... (0.00) (0.00) (0.00) (0.10) (0.00) (0.00)
Sources other than net
investment income.................... (0.01) (0.01) (0.00) (0.00) (0.10) (0.00)
------------ -------------- ---------- ------------ ------------ ------------
Total distributions................. (1.21) (0.62) (0.53) (1.50) (0.77) (0.00)
------------ -------------- ---------- ------------ ------------ ------------
Net asset value, end of period.......... $ 10.45 $ 10.86 $ 8.80 $ 8.64 $ 11.07 $ 9.83
------------ -------------- ---------- ------------ ------------ ------------
------------ -------------- ---------- ------------ ------------ ------------
Total investment return (d)............. 7.2% 1.1%(a) 8.22% (9.39)% 21.1% (0.4)%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $122,526 $57,063 $235,481 $262,405 $182,972 $ 2,624
Ratio of net investment income to
average net assets..................... 10.7% 7.41%*(b) 6.33% 6.22% 6.5% 8.0%(b)
Ratio of expenses to average net assets:
With expense reductions............... 1.7% 1.80%*(b) 2.00% 1.98% 2.0% 1.9%(b)
Without expense reductions............ --%** --%** 2.03% --%** --%** --%**
Portfolio turnover rate ++++............ 413% 291%(b) 385% 625% 495% 351%
<CAPTION>
ADVISOR
CLASS+++
--------------
<S> <C>
JUNE 1, 1995
TO
OCTOBER 31,
1995(C)
--------------
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 8.98
--------------
Income from investment operations:
Net investment income................. 0.26
Net realized and unrealized gain
(loss) on investments................ (0.19)
--------------
Net increase (decrease) from
investment operations.............. 0.07
--------------
Distributions:
Net investment income................. (0.25)
Net realized gain on
investments.......................... (0.00)
In excess of net realized gain on
investments.......................... (0.00)
Return of capital..................... (0.00)
Sources other than net
investment income.................... (0.00)
--------------
Total distributions................. (0.25)
--------------
Net asset value, end of period.......... $ 8.80
--------------
--------------
Total investment return (d)............. 0.83%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $ 131
Ratio of net investment income to
average net assets..................... 7.33%(b)
Ratio of expenses to average net assets:
With expense reductions............... 1.00%(b)
Without expense reductions............ 1.03%(b)
Portfolio turnover rate ++++............ 385%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ On June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Net of $0.01 per share of Fund operating expenses reimbursed by LGT Asset
Management.
(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.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 8
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------
1995(C) 1994 1993(C) 1992 1991 1990
--------- --------- --------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20 $ 11.17
--------- --------- --------- -------- -------- --------
Income from investment operations:
Net investment income................. 0.97 0.79 0.96 0.86 0.84* 1.04*
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 0.31 (0.02) (0.17)
--------- --------- --------- -------- -------- --------
Net increase (decrease) from
investment operations.............. 0.28 (1.35) 3.81 1.17 0.82 0.87
--------- --------- --------- -------- -------- --------
Distributions:
Net investment income................. (0.80) (0.79) (0.96) (0.83) (0.60) (0.84)
Net realized gain on investments...... (0.00) (0.38) (0.37) (0.00) (0.51) (0.00)
Return of capital (0.04) (0.21) (0.00) (0.00) (0.00) (0.00)
Sources other than net investment
income............................... (0.00) (0.00) (0.12) (0.00) (0.00) (0.00)
--------- --------- --------- -------- -------- --------
Total distributions................. (0.84) (1.38) (1.45) (0.83) (1.11) (0.84)
--------- --------- --------- -------- -------- --------
Net asset value, end of period.......... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20
--------- --------- --------- -------- -------- --------
--------- --------- --------- -------- -------- --------
Total investment return (d)............. 3.06% (10.44)% 37.0% 11.1% 7.7% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $188,165 $275,241 $287,870 $83,849 $55,967 $44,545
Ratio of net investment income to
average
net assets............................. 9.64% 6.74% 7.2% 7.6% 7.2%* 9.6%*
Ratio of expenses to average net assets:
With expense reductions............... 1.42% 1.40% 1.7% 1.8% 1.9%* 1.9%*
Without expense reductions............ 1.45% --%(f) --%(f) --%(f) --%(f) --%(f)
Ratio of interest expenses to average
net assets............................. N/A 0.10% N/A N/A N/A N/A
Portfolio turnover rate+++.............. 238% 583% 310% 418% 630% 501%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, 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 LGT Asset Management of Fund operating expenses of
$0.01, $0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989
and 1988, respectively. Without such reimbursements, the expense ratios
would have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net
investment income to average net assets would have been 7.16%, 9.26%, 7.56%
and 6.42% for the year ended October 31, 1991, 1990, 1989 and 1988,
respectively.
** On June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(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.
(e) Annualized.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
<TABLE>
<CAPTION>
AVERAGE AVERAGE NUMBER OF AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT FUND'S SHARES AMOUNT OF DEBT
OUTSTANDING AT OUTSTANDING OUTSTANDING PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ----------------------- -----------------
<S> <C> <C> <C> <C>
Year Ended October 31, 1995....................... $ 0 $ 0 Class A - 21,156,980 $ 0
Class B - 37,786,015
Advisor Class - 43,361
</TABLE>
Prospectus Page 9
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
CLASS A+
---------------------
<S> <C> <C>
MAR. 29,
1988
(COMMENCE-
YEAR MENT OF
ENDED OPERATIONS)
OCT. 31, TO
-------- OCT. 31,
1989 1988
-------- ----------
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 11.25 $ 11.43
-------- ----------
Income from investment operations:
Net investment income................. 0.82* 0.45*
Net realized and unrealized gain
(loss) on investments................ (0.10) (0.24)
-------- ----------
Net increase (decrease) from
investment operations.............. 0.72 0.21
Distributions:
Net investment income................. (0.80) (0.39)
Net realized gain on
investments.......................... (0.00) (0.00)
Return of capital..................... (0.00) (0.00)
Sources other than net
investment income.................... (0.00) (0.00)
-------- ----------
Total distributions................. (0.80) (0.39)
-------- ----------
Net asset value, end of period.......... $ 11.17 $ 11.25
-------- ----------
-------- ----------
Total investment return (d)............. 6.8% 1.2%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)........................... $37,820 $21,830
Ratio of net investment income to
average net assets................... 7.7%* 7.22%*(e)
Ratio of expenses to average net assets:
With expense reductions............... 1.8%* 1.70%*(e)
Without expense reductions............ --%(f) --%(f)
Ratio of interest expenses to average
net assets............................. N/A N/A
Portfolio turnover rate+++.............. 385% 340%
<CAPTION>
ADVISOR
CLASS B++ CLASS**
-------------------------------------------- --------
<S> <C> <C> <C> <C> <C>
OCT. 22, JUNE 1,
YEAR ENDED OCTOBER 31, 1992 TO 1995 TO
--------------------------------- OCT. 31, OCT. 31,
1995(C) 1994(C) 1993(C) 1992 1995(C)
--------- --------- --------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 10.88 $ 13.60 $ 11.24 $ 11.36 $ 10.32
--------- --------- --------- -------- --------
Income from investment operations:
Net investment income................. 0.91 0.73 0.89 0.01 0.41
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 (0.13) (0.04)
--------- --------- --------- -------- --------
Net increase (decrease) from
investment operations.............. 0.22 (1.41) 3.74 (0.12) 0.37
Distributions:
Net investment income................. (0.73) (0.72) (0.89) (0.00) (0.34)
Net realized gain on
investments.......................... (0.00) (0.38) (0.37) (0.00) (0.00)
Return of capital..................... (0.04) (0.21) (0.00) (0.00) (0.02)
Sources other than net
investment income.................... (0.00) (0.00) (0.12) (0.00) (0.00)
--------- --------- --------- -------- --------
Total distributions................. (0.77) (1.31) (1.38) (0.00) (0.36)
--------- --------- --------- -------- --------
Net asset value, end of period.......... $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 10.33
--------- --------- --------- -------- --------
--------- --------- --------- -------- --------
Total investment return (d)............. 2.48% (11.02)% 36.2% (1.1)%(a) 3.72%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)........................... $357,852 $458,550 $310,431 $ 533 $ 443
Ratio of net investment income to
average net assets................... 8.99% 6.09% 6.5% N/A(b) 9.99%(e)
Ratio of expenses to average net assets:
With expense reductions............... 2.07% 2.05% 2.4% N/A(b) 1.07%(e)
Without expense reductions............ 2.10% --%(f) --%(f) --%(f) 1.10%(e)
Ratio of interest expenses to average
net assets............................. N/A 0.10% N/A N/A N/A
Portfolio turnover rate+++.............. 238% 583% 310% 418% 238%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, 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 LGT Asset Management of Fund operating expenses of
$0.01, $0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989
and 1988, respectively. Without such reimbursements, the expense ratios
would have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net
investment income to average net assets would have been 7.16%, 9.26%, 7.56%
and 6.42% for the year ended October 31, 1991, 1990, 1989 and 1988,
respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(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.
(e) Annualized.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 10
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------
OCTOBER 22, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
------------------------------ TO OCTOBER 31,
1995 1994(C) 1993(C) 1992
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year... $ 12.56 $ 14.92 $ 11.43 $11.43
-------- -------- -------- -------
Income from investment operations:
Net investment income.............. 1.35 0.94 0.78 0.00
Net realized and unrealized gain
(loss) on investments............. (1.09) (1.87) 3.92 0.00
-------- -------- -------- -------
Net increase (decrease) from
investment operations............. 0.26 (0.93) 4.70 0.00
-------- -------- -------- -------
Distributions:
Net investment income.............. (1.03) (0.94) (0.78) (0.00)
Net realized gain on investments... (0.03) (0.27) (0.00) (0.00)
In excess of net realized gain on
investments....................... (0.00) (0.22) (0.00) (0.00)
Sources other than net
investment income................. (0.00) (0.00) (0.43) (0.00)
Return of capital.................. (0.06) (0.00) (0.00) (0.00)
-------- -------- -------- -------
Total distributions.............. (1.12) (1.43) (1.21) (0.00)
-------- -------- -------- -------
Net asset value, end of year......... $ 11.70 $ 12.56 $ 14.92 $11.43
-------- -------- -------- -------
-------- -------- -------- -------
Total investment return (e).......... 2.81% (6.45)% 43.6% 0.0%(b)
-------- -------- -------- -------
-------- -------- -------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................. $142,002 $167,974 $143,171 $ 207
Ratio of net investment income (loss)
to average net assets.............. 11.85% 7.00% 6.4% N/A(d)
Ratio of operating expenses to
average net assets................. 1.75% 1.57% 2.2% N/A(d)
Ratio of interest expense to average
net assets......................... N/A 0.22% N/A N/A
<CAPTION>
CLASS B++
---------------------------------------------------------- ADVISOR CLASS**
OCTOBER 22, 1992 ----------------
(COMMENCEMENT JUNE 1, 1995
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
------------------------------------ TO OCTOBER 31, OCTOBER 31,
1995 1994(C) 1993(C) 1992 1995
-------- -------- -------- ---------------- ----------------
<S> <C><C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year... $ 12.56 $ 14.90 $ 11.43 $11.43 $11.44
-------- -------- -------- ------- -------
Income from investment operations:
Net investment income.............. 1.27 0.86 0.70 0.00 0.57
Net realized and unrealized gain
(loss) on investments............. (1.09) (1.85) 3.90 0.00 0.17
-------- -------- -------- ------- -------
Net increase (decrease) from
investment operations............. 0.18 (0.99) 4.60 0.00 0.74
-------- -------- -------- ------- -------
Distributions:
Net investment income.............. (0.96) (0.86) (0.70) (0.00) (0.44)
Net realized gain on investments... (0.03) (0.27) (0.00) (0.00) (0.00)
In excess of net realized gain on
investments....................... (0.00) (0.22) (0.00) (0.00) (0.00)
Sources other than net
investment income................. (0.00) (0.00) (0.43) (0.00) (0.00)
Return of capital.................. (0.06) (0.00) (0.00) (0.00) (0.03)
-------- -------- -------- ------- -------
Total distributions.............. (1.05) (1.35) (1.13) (0.00) (0.47)
-------- -------- -------- ------- -------
Net asset value, end of year......... $ 11.69 $ 12.56 $ 14.90 $11.43 $11.71
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Total investment return (e).......... 2.07% (6.99)% 42.6% 0.0%(b) 6.54%(b)
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................. $214,897 $232,423 $127,035 $ 53 $1,463
Ratio of net investment income (loss)
to average net assets.............. 11.20% 6.35% 5.8% N/A(d) 12.20%(a)
Ratio of operating expenses to
average net assets................. 2.40% 2.22% 2.8% N/A(d) 1.40%(a)
Ratio of interest expense to average
net assets......................... N/A 0.22% N/A N/A N/A
</TABLE>
- --------------
(a) Annualized.
(b) Not annualized.
(c) These selected per share data were calculated based upon weighted average
shares during the year.
(d) Ratios are not meaningful due to short period of operation.
(e) Total investment return does not include sales charges.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
<TABLE>
<CAPTION>
AVERAGE AVERAGE NUMBER OF
AMOUNT OF DEBT AMOUNT OF DEBT FUND'S SHARES
OUTSTANDING AT OUTSTANDING OUTSTANDING
END OF PERIOD DURING THE PERIOD DURING THE PERIOD
--------------------- ----------------------- --------------------------
<S> <C> <C> <C>
Year Ended October 31, 1995....... $ 0 $ 0 Class A -- 12,506,489
Class B -- 18,165,351
Advisor Class -- 123,522
<CAPTION>
AVERAGE
AMOUNT OF DEBT
PER SHARE
DURING THE PERIOD
-----------------------
<S> <C>
Year Ended October 31, 1995....... $ 0
</TABLE>
Prospectus Page 11
<PAGE>
GT GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
GOVERNMENT INCOME FUND
The Government Income Fund seeks a high level of current income by investing
primarily in high quality debt securities of the U.S. and foreign governments,
their agencies and instrumentalities. The Fund's secondary objectives are
capital appreciation and protection of principal through active management of
its maturity structure and currency exposure. There is no assurance that the
Fund's investment objectives will be achieved.
At least 65% of the Fund's total assets normally are invested in debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. For purposes of this policy, the Fund considers debt
obligations of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank, to be
"government securities."
The Fund invests primarily in high quality government debt securities. "High
quality" debt securities are those rated in the top two ratings categories of
Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings
Services ("S&P") or, if not rated, determined to be of comparable quality by LGT
Asset Management. A description of Moody's and S&P ratings is included in the
Appendix to this Prospectus.
The Fund currently contemplates that it will invest principally in obligations
of the United States, Canada, Japan, the Western European nations, New Zealand
and Australia, as well as in multinational currency units. Under normal market
conditions, the Fund invests in issues of not less than three different
countries; investments in the securities of any one country, other than the
United States, normally represent no more than 40% of the Fund's total assets.
The Fund will not invest in a foreign currency or in securities denominated in a
foreign currency if such currency is not at the time of investment considered by
LGT Asset Management to be fully exchangable into U.S. dollars (or a
multinational currency unit) without legal restriction. The Fund may purchase
securities that are issued by the government or a company or financial
institution of one country but denominated in the currency of another country
(or a multinational currency unit).
The Fund may invest up to 10% of its total assets in "illiquid securities." The
Fund may also use instruments (including forward currency contracts) often
referred to as "derivatives." See "Options, Futures and Forward Currency
Transactions."
The Fund may also invest up to 35% of its total assets in a combination of: (a)
foreign government securities that are not high quality but are rated at least
"investment grade," i.e., rated within the four highest ratings categories of
Moody's or S&P or, if not rated, determined by LGT Asset Management to be of
comparable quality; (b) corporate debt obligations of U.S. or foreign issuers
rated at least investment grade by Moody's or S&P, including debt obligations
convertible into equity securities or having attached warrants or rights to
purchase equity securities; and (c) common stocks, preferred stocks and warrants
to acquire such securities, provided that the Fund will not invest more than 20%
of its total assets in such securities.
LGT Asset Management allocates the Fund's assets among securities of countries
and in currency denominations where opportunities for meeting the Fund's
investment objectives are expected to be the most attractive. LGT Asset
Management selects securities of particular issuers on the basis of its views as
to the best values then currently available in the marketplace. Such values are
a function of yield, maturity, issue classification and quality characteristics,
coupled with expectations regarding the local and world economies, movements in
the general level and term of interest rates, currency values, political
developments and variations of the supply of funds available for investment in
the world bond market relative to the demands placed upon it.
STRATEGIC INCOME FUND
The Strategic Income Fund primarily seeks high current income and secondarily
seeks capital appreciation. There is no assurance that the Fund's investment
objectives will be achieved.
The Strategic Income Fund invests in debt securities of issuers in: (1) the
United States; (2) developed foreign countries; and (3) emerging markets. The
Fund selects debt securities from those issued by governments, their agencies
and instrumentalities; central banks; and commercial banks and other corporate
entities. Debt securities in which the
Prospectus Page 12
<PAGE>
GT GLOBAL INCOME FUNDS
Fund may invest include bonds, notes, debentures, and other similar instruments.
The Fund normally invests at least 50% of its total assets in U.S. and foreign
debt and other fixed income securities that, at the time of purchase, are rated
at least investment grade or, if not rated, determined by LGT Asset Management
to be of comparable quality. No more than 50% of the Fund's total assets may be
invested in securities rated below investment grade. Such securities involve a
high degree of risk and are predominantly speculative. They are the equivalent
of high yield, high risk bonds, commonly known as "junk bonds." The Fund may
also invest in securities that are in default as to payment of principal and/or
interest. See "Risk Factors."
The Fund considers "emerging markets" to consist of all countries determined by
LGT Asset Management to have developing or emerging economies and markets. These
countries generally include every country in the world except the United States,
Canada, Japan, Australia, New Zealand and most countries located in Western
Europe. The Fund will consider investment in the following emerging markets:
<TABLE>
<S> <C>
Algeria Jordan
Argentina Kenya
Bolivia Malaysia
Botswana Mauritius
Brazil Mexico
Bulgaria Morocco
Chile Nicaragua
China Nigeria
Colombia Pakistan
Costa Rica Panama
Cyprus Peru
Czech Republic Philippines
Dominican Poland
Republic Portugal
Ecuador Republic of Slovakia
Egypt Russia
El Salvador Singapore
Finland South Africa
Ghana South Korea
Greece Sri Lanka
Hong Kong Swaziland
Hungary Taiwan
India Thailand
Indonesia Turkey
Israel Uruguay
Ivory Coast Venezuela
Jamaica Zimbabwe
</TABLE>
The Strategic Income Fund will not be invested in all such markets at all times.
Moreover, investing in some of those markets currently may not be desirable or
feasible, due to the lack of adequate custody arrangements for the Strategic
Income Fund's assets, overly burdensome repatriation requirements and similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks or for other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as defined above; (ii) that
(alone or on a consolidated basis) derives 50% or more of its total revenue from
either goods produced, sales made or services performed in emerging markets; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
The Fund's investments in emerging market securities may consist substantially
of Brady Bonds (see "General Policies -- Brady Bonds," below) and other
sovereign debt securities issued by emerging market governments. "Sovereign debt
securities" are those issued by emerging market governments that are traded in
the markets of developed countries or groups of developed countries. LGT Asset
Management may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Fund without regard to ratings.
Currently, the substantial majority of emerging market debt securities are
considered to have a credit quality below investment grade. Because the Fund's
investment in debt securities rated below investment grade is limited to 50% of
the Fund's total assets, the Fund's investment in emerging market debt
securities is therefore limited to 50% of its total assets as well.
The Fund also may consider making carefully selected investments in
below-investment grade debt securities of corporate issuers in the United States
and in developed foreign countries, subject to the overall 50% limitation. See
"Risk Factors" for a more complete description of the risks associated with
investment in emerging market and other lower quality debt securities. The Fund
also may invest in bank loan participations and assignments, which are fixed and
floating rate loans arranged through private negotiations between foreign
entities. See "General Policies -- Loan Participations and Assignments" below.
The Fund may invest up to 15% of its net assets in illiquid securities. The Fund
may also use instruments (including forward currency contracts) often referred
to as "derivatives." See "General Policies -- Options, Futures and Forward
Currency Transactions."
Prospectus Page 13
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
The High Income Fund primarily seeks high current income, and secondarily seeks
capital appreciation. The Fund seeks its objectives by investing all of its
investable assets in the Global High Income Portfolio, which in turn seeks the
same objectives as the Fund by normally investing at least 65% of its total
assets in debt securities of issuers in emerging markets. There is no assurance
that the Portfolio's or the Fund's investment objectives will be achieved.
The Portfolio intends to invest in the following types of debt securities:
bonds, notes and debentures of emerging market governments; securities issued or
guaranteed by such governments' agencies or instrumentalities; securities issued
or guaranteed by the central banks of emerging market countries; and securities
issued by other banks and companies in such countries and securities denominated
in or indexed to the currencies of emerging markets. Under current market
conditions, the Portfolio expects its investments in emerging market securities
to consist substantially of Brady Bonds (see "General Policies -- Brady Bonds,"
below) and other sovereign debt securities.
Under normal circumstances, the Portfolio may invest up to 35% of its total
assets in a combination of (i) equity securities of issuers in emerging markets
included in the list above under the caption "Strategic Income Fund"; (ii)
equity and debt securities of issuers in developed countries, including the
United States; (iii) securities of issuers in emerging markets not included in
the list of emerging markets above, if investing therein becomes feasible and
desirable subsequent to the date of this Prospectus; and (iv) cash and money
market instruments. In evaluating investments in securities of issuers in
developed markets, LGT Asset Management will consider, among other things, the
business activities of the issuer in emerging markets and the impact that
developments in emerging markets are likely to have on the issuer's financial
condition.
The Portfolio considers "emerging markets" to consist of all countries
determined by LGT Asset Management to have developing or emerging economies and
markets. These countries generally include every country in the world except the
United States, Canada, Japan, Australia, New Zealand and most countries in
Western Europe. The Portfolio will consider investment in emerging markets
listed above under "Strategic Income Fund." The Portfolio will not be invested
in all such markets at all times. Moreover, investing in some of those markets
currently may not be desirable or feasible, due to the lack of adequate custody
arrangements for the Portfolio's assets, overly burdensome repatriation
requirements and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus and Statement of Additional Information, an issuer in
an emerging market is an entity: (i) for which the principal securities trading
is an emerging market, as defined above; (ii) that (alone or on a consolidated
basis) derives 50% or more of its total revenue from either goods produced,
sales made or services performed in emerging markets; or (iii) organized under
the laws of, or with a principal office in, an emerging market.
Under normal circumstances, substantially all of the Portfolio's assets will be
invested in debt securities of both governmental and corporate issuers in
emerging markets. Emerging markets debt securities generally are considered to
have a credit quality below investment grade, as defined above. Lower quality
securities involve a high degree of risk and are predominantly speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." See "Risk Factors." Many emerging market debt
securities are not rated by U.S. ratings agencies such as Moody's and S&P. The
Portfolio's ability to achieve its investment objectives is thus more dependent
on LGT Asset Management's credit analysis. The Portfolio may invest in
securities that are in default as to payment of principal and/or interest.
The Portfolio may invest in bank loan participations and assignments, which are
fixed and floating rate loans arranged through private negotiations between
foreign entities. See "General Policies -- Loan Participations and Assignments"
below. The Portfolio may invest up to 15% of its net assets in illiquid
securities. The Portfolio may also use instruments (including forward currency
contracts) often referred to as "derivatives." See "General Policies -- Options,
Futures and Forward Currency Transactions."
OTHER INFORMATION REGARDING THE PORTFOLIO. The High Income Fund may withdraw its
investment from the Portfolio at any time, if the Board of Directors of the
Company determines that it is in the best interests of the 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
the Fund
Prospectus Page 14
<PAGE>
GT GLOBAL INCOME FUNDS
in another pooled investment entity having substantially the same investment
objectives as the Fund or the retention by the Fund of its own investment
adviser to manage the Fund's assets in accordance with the investment
objectives, policies and limitations discussed herein with respect to the
Portfolio.
The approval of the High Income Fund and of other investors in the Portfolio, if
any, is not required to change the investment objectives, policies or
limitations of the Portfolio, unless otherwise specified. Written notice shall
be provided to shareholders of the High Income Fund thirty days prior to any
changes in the Portfolio's investment objectives. If the objectives of the
Portfolio change and the shareholders of the High Income Fund do not approve a
parallel change in the Fund's investment objectives, the Fund would seek an
alternative investment vehicle or directly retain its own investment adviser.
As previously described, investors should be aware that the High Income Fund,
unlike mutual funds which directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objectives by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Since the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
In addition to selling its interests to the Fund, the Portfolio may sell its
interests to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
all of its assets in the Portfolio, it would not be required to sell its shares
at the same public offering price as the Fund and may charge different sales
commissions. Therefore, investors in the Fund may experience different returns
from investors in another investment company which invests exclusively in the
Portfolio. As of the date of this Prospectus, the High Income Fund is the only
institutional investor in the Portfolio.
Investors in the Fund should be aware that the Funds' investment in the
Portfolio may be materially affected by the actions of large investors in the
Portfolio, if any. For example, as with all open-end investment companies, if a
large investor were to redeem its interest in the Portfolio, the Portfolio's
remaining investors could experience higher pro rata operating expenses, thereby
producing lower returns. As a result, the Portfolio's security holdings may
become less diverse, resulting in increased risk. Institutional investors in the
Portfolio that have a greater pro rata ownership interest in the Portfolio than
the Fund could have effective voting control over the operation of the
Portfolio. A change in the Portfolio's fundamental objectives, policies and
restrictions, which is not approved by the shareholders of the Fund, could
require the Fund to redeem its interest in the Portfolio. Any such redemption
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) by the Portfolio. Should such a distribution occur, the 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 Fund and could affect adversely the
liquidity of the Fund.
See "Management" for a complete description of the management and other expenses
associated with the High Income Fund's investment in the Portfolio. This
Prospectus and the Statement of Additional Information relating to the High
Income Fund and the Portfolio, dated February 29, 1996, contain more detailed
information about the High Income Fund and the Portfolio, including information
related to (i) the investment policies and restrictions of the Fund and the
Portfolio, (ii) the Directors and officers of the Company, the Trustees and
officers of the Portfolio, the administrator of the Fund and the investment
manager and administrator of the Portfolio, (iii) portfolio transactions and
brokerage commissions, (iv) the Fund's shares, including the rights and
liabilities of its shareholders, (v) additional performance information,
including the method used to calculate yield and total return, (vi) the
determination of the value of the shares of the Fund and (vii) the audited
financial statements of Assets and Liabilities of the Fund and the Portfolio at
October 31, 1995, respectively.
GENERAL POLICIES
TEMPORARY DEFENSIVE STRATEGIES. LGT Asset Management may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted
due to market, economic or political conditions. Pursuant to such a defensive
strategy, the Government Income Fund, the Strategic Income Fund and the
Portfolio temporarily may hold cash (U.S. dollars, foreign currencies or
Prospectus Page 15
<PAGE>
GT GLOBAL INCOME FUNDS
multinational currency units) and/or invest up to 100% of their respective
assets in high quality debt securities or money market instruments of U.S. or
foreign issuers, and most or all of the Government Income Fund's, the Strategic
Income Fund's or the Portfolio's investments may be made in the United States
and denominated in U.S. dollars. To the extent the Funds or the Portfolio employ
a temporary defensive strategy, they will not be invested so as to achieve
directly their investment objectives.
In addition, pending investment of proceeds from new sales of Fund or Portfolio
shares or to meet ordinary daily cash needs, the Government Income Fund, the
Strategic Income Fund and the Portfolio temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest any portion
of its assets in high quality foreign or domestic money market instruments.
ASSET ALLOCATION. The Government Income Fund, the Strategic Income Fund and the
Portfolio each invests in debt obligations allocated among diverse markets and
denominated in various currencies, including U.S. dollars, or in multinational
currency units such as European Currency Units. The Government Income Fund, the
Strategic Income Fund and the Portfolio may purchase securities that are issued
by the government or a company or financial institution of one country but
denominated in the currency of another country (or a multinational currency
unit). The Funds are designed for investors who wish to accept the risks
entailed in such investments, which are different from those associated with a
portfolio consisting entirely of securities of U.S. issuers denominated in U.S.
dollars. See "Risk Factors."
LGT Asset Management selectively will allocate the assets of the Government
Income Fund, the Strategic Income Fund and the Portfolio in securities of
issuers in countries and in currency denominations where the combination of
fixed income market returns, the price appreciation potential of fixed income
securities and currency exchange rate movements will present opportunities
primarily for high current income and secondarily for capital appreciation (and,
in the case of the Government Income Fund, secondarily for capital appreciation
and protection of principal). In so doing, LGT Asset Management intends to take
full advantage of the different yield, risk and return characteristics that
investment in the fixed income markets of different countries can provide for
U.S. investors. Fundamental economic strength, credit quality and currency and
interest rate trends will be the principal determinants of the emphasis given to
various country, geographic and industry sectors within the Government Income
Fund, the Strategic Income Fund and the Portfolio. Securities held by the
Government Income Fund, the Strategic Income Fund and the Portfolio may be
invested in without limitation as to maturity.
LGT Asset Management generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, if the exchange rate of the foreign currency
declines, the dollar value of the security will decrease. However, the
Government Income Fund, the Strategic Income Fund and the Portfolio each may
seek to protect itself against such negative currency movements through the use
of sophisticated investment techniques. See "Options, Futures and Forward
Currency Transactions" and "Swaps, Caps, Floors and Collars."
BRADY BONDS. The Strategic Income Fund and the Portfolio may invest in "Brady
Bonds," which are debt restructurings that provide for the exchange of cash and
loans for newly issued bonds. Brady Bonds have been issued by the countries of,
among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Jordan, Mexico, Nigeria, Philippines, Poland, Uruguay,
Venezuela and are expected to be issued by Panama, Peru and other emerging
market countries. Approximately $139 billion in principal amount of Brady Bonds
are outstanding, the largest proportion having been issued by Brazil, Argentina
and Mexico. Brady Bonds issued by Brazil, Argentina and Mexico currently are
rated below investment grade. As of the date of this Prospectus, the Strategic
Income Fund and the Portfolio are not aware of the occurrence of any payment
defaults on Brady Bonds. Investors should recognize, however, that Brady Bonds
have been issued only recently and, accordingly, do not have a long payment
history. Brady Bonds may be collateralized or uncollateralized, are issued in
various currencies (primarily the U.S. dollar) and are actively traded in the
secondary market for Latin American debt. The Salomon Brothers Brady Bond Index
provides a benchmark that can be used to compare returns of emerging market
Brady Bonds
Prospectus Page 16
<PAGE>
GT GLOBAL INCOME FUNDS
with returns in other bond markets, e.g., the U.S. bond market.
The Strategic Income Fund and the Portfolio may invest in either collateralized
or uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on such bonds generally are
collateralized by cash or securities in an amount that, in the case of fixed
rate bonds, is equal to at least one year of rolling interest payments or, in
the case of floating rate bonds, initially is equal to at least one year's
rolling interest payments based on the applicable interest rate at that time and
is adjusted at regular intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may invest in fixed and floating rate loans ("Loans") arranged through private
negotiations between a foreign entity and one or more financial institutions
("Lenders"). The majority of the Fund's and the Portfolio's investments in Loans
in emerging markets is expected to be in the form of participations in Loans
("Participations") and assignments of portions of Loans from third parties
("Assignments"). Participations typically will result in the Fund and/or the
Portfolio having a contractual relationship only with the Lender, not with the
borrower government. The Fund and/or the Portfolio will have the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. In connection with purchasing
Participations, the Fund and/or the Portfolio generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the loan ("Loan Agreement"), nor any rights of set-off against the borrower,
and the Fund and/or the Portfolio may not directly benefit from any collateral
supporting the Loan in which it has purchased the Participation. As a result,
the Fund and/or the Portfolio will assume the credit risk of both the borrower
and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
and/or the Portfolio may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. The Fund
and/or the Portfolio will acquire Participations only if the Lender
interpositioned between the Fund and/or the Portfolio and the borrower is
determined by LGT Asset Management to be creditworthy. When the Fund and/or the
Portfolio purchases Assignments from Lenders, the Fund and/or the Portfolio will
acquire direct rights against the borrower on the Loan. However, since
Assignments are arranged through private negotiations between potential
assignees and assignors, the rights and obligations acquired by the Fund and/or
the Portfolio as the purchaser of an Assignment may differ from, and be more
limited than, those held by the assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Government Income Fund, the
Strategic Income Fund and the Portfolio may purchase debt securities on a
"when-issued" basis and may purchase or sell such securities on a "forward
commitment" basis in order to hedge against anticipated changes in interest
rates and prices. The price, which is generally expressed in yield terms, is
fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Funds and the
Portfolio will purchase or sell when-issued securities 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 of
the securities. If a Fund or the Portfolio disposes of the right to acquire a
when-issued security prior to its acquisition or disposes of its right to
deliver or receive against a forward commitment, it may incur a gain or loss. At
the time a Fund or the 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 a Fund or the Portfolio may incur a loss. The Government
Income Fund may invest up to 5% if its total assets in a combination of
securities purchased on a when-issued basis or with respect to which it has
entered into forward commitment agreements.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. From time to
time, it may be advantageous for the Government Income Fund to borrow money
rather than sell existing portfolio
Prospectus Page 17
<PAGE>
GT GLOBAL INCOME FUNDS
positions to meet redemption requests. Accordingly, the Government Income Fund
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemption of
Fund shares. The Government Income Fund also may borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions.
However, the Government Income Fund will not borrow for investment purposes, nor
will the Fund purchase securities while borrowings are outstanding. See
"Investment Objectives and Policies" in the Statement of Additional Information.
Both the Strategic Income Fund and the Portfolio are authorized to borrow money
from banks in an amount up to 33 1/3% of its total assets (including the amount
borrowed), less all liabilities and indebtedness other than the borrowings and
may use the proceeds of such borrowings for investment purposes. The Strategic
Income Fund and the Portfolio will borrow for investment purposes only when LGT
Asset Management believes that such borrowings will benefit the Fund or the
Portfolio, respectively, after taking into account considerations such as the
costs of the borrowing and the likely investment returns on the securities
purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund and the Portfolio creates
the opportunity for increased net income and appreciation but, at the same time,
involves special risk considerations. For example, leveraging might exaggerate
changes in the net asset value of Fund shares and in the yield realized by the
Fund or the Portfolio. Although the principal amount of such borrowings will be
fixed, the Strategic Income Fund's and the Portfolio's assets may change in
value during the time the borrowing is outstanding. By leveraging the Fund or
the Portfolio, changes in net asset values, higher or lower, may be greater in
degree than if leverage was not employed. To the extent the income derived from
the assets obtained with borrowed funds exceeds the interest and other expenses
that the Fund or the Portfolio will have to pay, the Fund's or the Portfolio's
net income will be greater than if borrowing was not used. Conversely, if the
income from the assets obtained with borrowed funds is not sufficient to cover
the cost of borrowing, the net income of the Fund or the Portfolio will be less
than if borrowing were not used, and therefore the amount available for
distribution to shareholders as dividends will be reduced. The Strategic Income
Fund and the Portfolio each expects that some of its borrowings may be made on a
secured basis.
In addition to the foregoing borrowings, the Strategic Income Fund and the
Portfolio each may borrow money for temporary or emergency purposes or payments
in an amount not exceeding 5% of the value of its total assets (not including
the amount borrowed) provided that the total amount borrowed by the Strategic
Income Fund or the Portfolio for any purpose does not exceed 33 1/3% of its
total assets.
The Funds and the Portfolio may also enter into reverse repurchase agreements
with a bank or recognized securities dealer, although the Strategic Income Fund
currently has no intention of doing so with respect to more than 5% of its total
assets. Under a reverse repurchase agreement, the Funds or the Portfolio would
sell securities and agree to repurchase them at a particular price at a future
date. At the time a Fund or the Portfolio enters into a reverse repurchase
agreement, it will establish and maintain a segregated account with an approved
custodian containing cash or liquid high grade debt securities having a value
not less than the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by a Fund or the Portfolio may decline below the price
of the securities a Fund or the Portfolio has sold but is obligated to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce a
Fund's or the Portfolio's obligation to repurchase the securities, and a Fund's
or the Portfolio's use of the proceeds of the reverse repurchase agreement may
effectively be restricted pending such decision.
The Strategic Income Fund and the Portfolio also may enter into "dollar rolls,"
in which the Fund or the Portfolio sells fixed income securities for delivery in
the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, the Fund or the Portfolio would forego principal and
interest paid on such securities. The Fund or the Portfolio would be compensated
by the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. See
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"Investment Objectives and Policies" in the Statement of Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Strategic Income Fund's or the Portfolio's assets for
purposes of calculating compliance with the Fund's or the Portfolio's borrowing
limitation. See "Investment Limitations" in the Statement of Additional
Information.
SECURITIES LENDING. The Government Income Fund, the Strategic Income Fund and
the Portfolio may to make loans of their respective portfolio securities to
broker/dealers or to other institutional investors. At all times a loan is
outstanding, each Fund and the Portfolio requires the borrower to maintain with
the Fund's or the 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. Each Fund
and the Portfolio will receive any interest paid on the loaned securities and a
fee and/or a portion of the interest earned on the collateral. Income received
in connection with securities lending may be used to offset the Fund's or the
Portfolio's custody fees. Each Fund and the Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in recovery of the loaned
securities and possible loss of rights in the collateral should the borrower
fail financially.
ZERO COUPON SECURITIES. The Strategic Income Fund and the Portfolio may invest
in certain zero coupon securities that are "stripped" U.S. Treasury notes and
bonds. They also may invest in zero coupon and other deep discount securities
issued by foreign governments and domestic and foreign corporations, including
certain Brady Bonds and other foreign debt and in payment-in-kind securities.
Zero coupon securities pay no interest to holders prior to maturity, and
payment-in-kind securities pay interest in the form of additional securities.
However, a portion of the original issue discount on zero coupon securities and
the "interest" on payment-in-kind securities will be included in the investing
Fund's or Portfolio's income. Accordingly, for a Fund to continue to qualify for
tax treatment as a regulated investment company and to avoid a certain excise
tax (see "Taxes" in the Statement of Additional Information), it may be required
to distribute an amount that is greater than the total amount of cash it
actually receives (or, in the case of the High Income Fund, its share of the
total amount of cash the Portfolio actually receives). These distributions must
be made from the Fund's (or, in the case of the High Income Fund, its, or its
share of the Portfolio's) cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund or the Portfolio will not be able to
purchase additional income-producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Government Income Fund, the Strategic Income
Fund and the Portfolio may utilize combinations of futures on bonds and forward
currency contracts to create investment positions that have substantially the
same characteristics as bonds of the same type as those on which the futures
contracts are written. Investment positions of this type are generally referred
to as "synthetic securities."
For example, in order to establish a synthetic security position for a Fund or
the Portfolio that is comparable to owning a Japanese government bond, LGT Asset
Management might purchase futures contracts on Japanese government bonds in the
desired principal amount and purchase forward currency contracts for Japanese
Yen in an amount equal to the then current purchase price for such bonds in the
Japanese cash market, with each contract having approximately the same delivery
date.
LGT Asset Management might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's or the
Portfolio's investment position, or LGT Asset Management might close out those
positions, thus effectively selling the synthetic security. Further, the amount
of each contract might be adjusted in response to market conditions and the
forward currency contract might be changed in amount or eliminated in order to
hedge against currency fluctuations.
Further, while these futures and currency contracts remain open, the Funds and
the Portfolio will comply with applicable Securities and Exchange Commission
guidelines to set aside cash, U.S.
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GT GLOBAL INCOME FUNDS
government securities or other liquid high grade debt securities in a segregated
account with its custodian in an amount sufficient to cover its potential
obligations under such contracts.
LGT Asset Management would create synthetic security positions for a Fund or the
Portfolio when it believes that it can obtain a better yield or achieve cost
savings in comparison to purchasing actual bonds or when comparable bonds are
not readily available in the market. Synthetic security positions are subject to
the risk that changes in the value of purchased futures contracts may differ
from changes in the value of the bonds that might otherwise have been purchased
in the cash market. Also, while LGT Asset Management believes that the cost of
creating synthetic security positions generally will be materially lower than
the cost of acquiring comparable bonds in the cash market, a Fund or the
Portfolio will incur transaction costs in connection with each purchase of a
futures or forward currency contract. The use of futures contracts and forward
currency contracts to create synthetic security positions also is subject to
substantially the same risks as those that exist when these instruments are used
in connection with hedging strategies. See "Options, Futures and Forward
Currency Transactions" below and "Options, Futures and Currency Strategies" in
the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. In seeking to protect
against currency exchange rate or interest rate changes that are adverse to
their present or prospective positions, the Government Income Fund, the
Strategic Income Fund and the Portfolio may employ certain risk management
practices involving the use of forward currency contracts, options on
securities, options on indices, options on currencies, and futures contracts and
options on futures contracts on U.S. and foreign government securities, indices
of those securities and currencies. The Strategic Income Fund and the Portfolio
also may enter into interest rate, currency and index swaps and purchase or sell
related caps, floors and collars and other derivatives. See "Swaps, Caps, Floors
and Collars" below. 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). The Government Income Fund, the Strategic
Income Fund and the Portfolio may enter into such instruments up to the full
value of their portfolio assets. There can be no assurance that a Fund's or the
Portfolio's risk management practices will succeed. These techniques are
described below and are further detailed in the Statement of Additional
Information.
Only a limited market, if any, currently exists for forward currency contracts
and options and futures instruments relating to currencies of most emerging
markets, to securities denominated in such currencies or to securities of
issuers domiciled or principally engaged in business in such emerging markets.
To the extent that such a market does not exist, LGT Asset Management may not be
able to effectively hedge its investment in such emerging markets.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Government Income Fund, the Strategic Income Fund and the
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 Government Income Fund, the Strategic Income Fund
and the Portfolio may enter into forward currency contracts either with respect
to specific transactions or with respect to the respective Fund's or the
Portfolio's portfolio positions. For example, when a Fund or the Portfolio
anticipates making a purchase or sale of a security, it may enter into a forward
currency contract in order to set the rate (either relative to the U.S. dollar
or another currency) at which a currency exchange transaction related to the
purchase or sale will be made. Further, when LGT Asset Management believes that
a particular currency may decline compared to the U.S. dollar or another
currency, a Fund or the Portfolio may enter into a forward contract to sell the
currency LGT Asset Management expects to decline in an amount up to the value of
the portfolio securities held by the Fund or the Portfolio denominated in a
foreign currency.
Each Fund and the 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, each Fund and the Portfolio may purchase and sell put and call
options on securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or the Portfolio or that LGT Asset Management
intends to include in the Fund's or the Portfolio's portfolio. The Funds and the
Portfolio also may buy and sell put and call
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GT GLOBAL INCOME FUNDS
options on indices. Such index options serve to hedge against overall
fluctuations in the securities markets or market sectors generally, rather than
anticipated increases or decreases in the value of a particular security.
Further, the Funds and the Portfolio may sell index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general market or market sector decline that could adversely affect
the Fund's or the Portfolio's portfolio. The Funds and the Portfolio also may
buy index futures contracts and purchase call options or write put options on
such contracts to hedge against a general market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. A Fund or
the Portfolio may use interest rate futures contracts and options thereon to
hedge its portfolio against changes in the general level of interest rates.
In addition, the Government Income Fund, the Strategic Income Fund and the
Portfolio may write and purchase put and call options on securities, currencies
and indices that are traded on recognized securities exchanges and
over-the-counter ("OTC") markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("the Code"), have the effect of limiting the extent to which the Government
Income Fund, the Strategic Income Fund and the Portfolio may enter into forward
contracts or futures contracts, or engage in options transactions. See "Taxes"
in the Statement of Additional Information.
Although a Fund or the 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 LGT Asset
Management's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contract's 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 Fund or the 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 Fund or
the Portfolio to purchase or sell a portfolio security at a time when it would
otherwise be favorable for it to do so, or the possible need for a Fund or the
Portfolio to sell a security at a disadvantageous time, due to the need for the
Fund or the Portfolio to maintain "cover" or to set aside securities in
connection with hedging transactions; and (6) the possible need of a Fund or the
Portfolio 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 LGT Asset
Management incorrectly forecasts currency exchange rates or interest rates in
utilizing a strategy for a Fund or the Portfolio, it would be in a better
position if it had not hedged at all. A Fund or the Portfolio also may conduct
its foreign currency exchange transactions on a spot (I.E., cash) basis at the
spot rate prevailing in the foreign currency exchange market.
SWAPS, CAPS, FLOORS AND COLLARS. The Strategic Income Fund and the Portfolio may
enter into interest rate, currency and index swaps, and purchase or sell related
caps, floors and collars and other derivative instruments. The Strategic Income
Fund and the Portfolio expect to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a technique for managing
the portfolio's duration (I.E., the price sensitivity to changes in interest
rates) or to protect against any increase in the price of securities the Fund or
the Portfolio anticipates purchasing at a later date. The Fund and the Portfolio
intend to use these transactions as hedges, and neither will sell interest rate
caps or floors if it does not own securities or other instruments providing an
income stream roughly equivalent to what the Fund or the Portfolio may be
obligated to pay.
Interest rate swaps involve the exchange by the Fund or the Portfolio with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed rate payments) with
respect to a notional
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GT GLOBAL INCOME FUNDS
amount of principal. A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the values of the reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
INDEXED COMMERCIAL PAPER. The Strategic Income Fund and the Portfolio may invest
without limitation in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide that
its principal amount is adjusted upwards or downwards (but not below zero) at
maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Strategic Income Fund and the Portfolio will
purchase such commercial paper with the currency in which it is denominated and,
at maturity, will receive interest and principal payments thereon in that
currency, but the amount of principal payable by the issuer at maturity will
change in proportion to the change (if any) in the exchange rate between the two
specified currencies between the date the instrument is issued and the date the
instrument matures. While such commercial paper entails the risk of loss of
principal, the potential for realizing gains as a result of changes in foreign
currency exchange rates enables the Fund and the Portfolio to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund and the Portfolio will not purchase such commercial paper for
speculation. The Fund and the Portfolio will establish a segregated account with
respect to its investments in this type of commercial paper and will maintain in
such account cash, U.S. government securities or liquid, high grade debt
securities having a value equal to the aggregate, outstanding principal amount
of the commercial paper of this type that is held by the Fund and the Portfolio.
OTHER INFORMATION. For the fiscal years ended October 31, 1995 and 1994, the
portfolio turnover rates for the Government Income Fund, the Strategic Income
Fund and the Portfolio were 385% and 625%, 238% and 583%, and 213% and 178%,
respectively. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs that the Funds or the
Portfolio will bear directly and could result in the realization of net capital
gains which would be taxable to shareholders. See "Management" and "Dividends,
Other Distributions, and Federal Income Taxation."
Each Fund's investment objectives may not be changed without the approval of a
majority of the respective Fund's outstanding voting securities. As defined in
the Investment Company Act of 1940, as amended ("1940 Act") and as used in this
Prospectus, a "majority of the Fund's outstanding voting securities" means the
lesser of (i) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares. In addition, each Fund has adopted certain investment
limitations which also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Each Fund's other investment policies described herein
are not fundamental policies and may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval, provided that any
such policies as so amended do not conflict with that Fund's fundamental
investment limitations.
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RISK FACTORS
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GENERAL. Each Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its portfolio positions and its net currency exposure. The
value of fixed income securities held by the Government Income Fund, the
Strategic Income Fund and the Portfolio generally fluctuates inversely with
interest rate movements. Longer term bonds held by the Government Income Fund,
the Strategic Income Fund or the Portfolio are subject to greater interest rate
risk. There is no assurance that any Fund or the Portfolio will achieve its
investment objectives.
According to LGT Asset Management, as of December 31, 1995, over 65% of the
value of all outstanding government debt obligations throughout the world was
represented by obligations denominated in currencies other than the U.S. dollar.
Moreover, from time to time, the debt securities of issuers located outside the
United States have substantially outperformed the debt obligations of U.S.
issuers. Accordingly, LGT Asset Management believes that the Government Income
Fund's and the Strategic Income Fund's policy of investing in debt securities
throughout the world and the Portfolio's policy of investing in debt securities
of issuers in emerging markets may enable the achievement of results superior to
those produced by mutual funds with similar objectives to those of the Funds and
the Portfolio, that invest solely in debt securities of U.S. issuers.
Nonetheless, foreign investing does entail certain risks. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies. The securities of non-U.S. issuers generally are not
registered with the SEC, nor are the issuers thereof usually subject to the
SEC's reporting requirements. Accordingly, there may be less publicly available
information about foreign securities and issuers than is available with respect
to U.S. securities and issuers. The Government Income and Strategic Income
Funds' and the Portfolio's net investment income from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing their 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 Government Income Fund, the Strategic Income Fund and the
Portfolio, political or social instability, or diplomatic developments which
could affect the investments of the Government Income Fund, the Strategic Income
Fund and the Portfolio 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.
Each Fund and the Portfolio is classified under the 1940 Act as a
"non-diversified" fund; therefore, the Government Income Fund, the Strategic
Income Fund, the High Income Fund (through its investment in the Portfolio) and
the Portfolio each will be able, with respect to 50% of their total assets, to
invest more than 5% of their total assets in obligations of one issuer. Because
each Fund and the Portfolio is permitted to invest a greater proportion of its
assets in the securities of a smaller number of issuers, the value of each
Fund's shares may fluctuate more widely and the Funds and the Portfolio may be
subject to greater investment and credit risk with respect to their portfolios
than mutual funds which are required to be more broadly diversified.
CURRENCY RISK. Since the Government Income Fund, the Strategic Income Fund and
the Portfolio normally invest substantially in securities denominated in
currencies other than the U.S. dollar, and because they may hold foreign
currencies, they will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Funds and gains and losses realized by the Funds. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and
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political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
RISKS ASSOCIATED WITH INVESTMENT IN EMERGING MARKETS. Because of the special
risks associated with investing in emerging markets, an investment in the
Strategic Income Fund and the Portfolio should be considered speculative.
Investors are strongly advised to consider carefully the special risks involved
in emerging markets, which are in addition to the usual risks of investing in
developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Strategic Income Fund or the Portfolio could lose its
entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Strategic Income Fund or the Portfolio to make intended
securities purchases due to settlement problems could cause the Strategic Income
Fund or the Portfolio to forego attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Strategic Income Fund or the Portfolio due to subsequent
declines in value of the portfolio security or, if the Strategic Income Fund or
the Portfolio has entered into a contract to sell the security, could result in
possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Strategic Income Fund's or the
Portfolio's portfolio securities in such markets may not be readily available.
Section 22(e) of the 1940 Act permits a registered investment company to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Strategic Income Fund or the
Portfolio believes that appropriate circumstances warrant, it will promptly
apply to the SEC for a determination that an emergency exists within the meaning
of Section 22(e) of the 1940 Act. During the period commencing from the
Strategic Income Fund's or the Portfolio's identification of such conditions
until the date of SEC action, the portfolio securities of the Strategic Income
Fund or the Portfolio in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Company's Board of
Directors or the Portfolio's Board of Trustees.
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GT GLOBAL INCOME FUNDS
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may have difficulty disposing of Assignments and Participations. The liquidity
of such securities is limited and, the Fund and the Portfolio anticipate that
such securities could be sold only to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Fund's and the Portfolio's ability to
dispose of particular Assignments or Participations when necessary to meet the
Fund's and/or the Portfolio's liquidity needs or in response to a specific
economic event, such as a deterioration in the creditworthiness of the borrower.
The lack of a liquid secondary market for Assignments and Participations also
may make it more difficult for the Fund and/or the Portfolio to assign a value
to those securities for purposes of valuing the Fund's or the Portfolio's
portfolio and calculating its net asset value.
SOVEREIGN DEBT. The Strategic Income Fund and the Portfolio may invest in
sovereign debt securities of emerging market governments, including Brady Bonds.
Investments in such securities involve special risks. The issuer of the debt or
the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in accordance with
the terms of such debt. Periods of economic uncertainty may result in the
volatility of market prices of sovereign debt obligations, and in turn a Fund's
net asset value, to a greater extent than the volatility inherent in domestic
fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's or the
Portfolio's investments. Emerging markets are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their sovereign debt. Although LGT Asset Management intends to manage the
Strategic Income Fund and the Portfolio in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Fund or the Portfolio to suffer a loss of interest or
principal on any of its holdings.
In recent years, some of the emerging market countries in which the Strategic
Income Fund and the Portfolio expect to invest have encountered difficulties in
servicing their sovereign debt obligations. Some of these countries have
withheld payments of interest and/or principal of sovereign debt. These
difficulties have also led to agreements to restructure external debt
obligations -- in particular, commercial bank loans, typically by rescheduling
principal payments, reducing interest rates and extending new credits to finance
interest payments on existing debt. In the future, holders of emerging market
sovereign debt securities may be requested to participate in similar
rescheduling of such debt. Certain emerging market countries are among the
largest debtors to commercial banks and foreign governments. Currently, Brazil,
Mexico and Argentina are the largest debtors among developing countries. At
times certain emerging market countries have declared moratoria on the payment
of principal and interest on external debt; such a moratorium is currently in
effect in certain emerging market countries. There is no bankruptcy proceeding
by which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
Prospectus Page 25
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GT GLOBAL INCOME FUNDS
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Strategic Income Fund and the Portfolio may invest involve great risk. As
noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Strategic Income Fund and the Portfolio may have difficulty disposing of and
valuing certain sovereign debt obligations because there may be a limited
trading market for such securities. Because there is no liquid secondary market
for many of these securities, the Strategic Income Fund and the Portfolio
anticipate that such securities could be sold only to a limited number of
dealers or institutional investors.
RISKS ASSOCIATED WITH INVESTMENTS IN LOWER QUALITY DEBT SECURITIES. As discussed
above, it is expected that under normal market conditions the Strategic Income
Fund may invest up to 50% of its total assets in debt securities rated below
investment grade, and substantially all the Portfolio's assets will be so
invested. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or 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 for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest quality 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. Lower quality debt securities are also generally considered
to be subject to greater risk than higher quality securities with regard to a
deterioration of general economic conditions. These securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds." As
noted above, the Strategic Income Fund and the Portfolio may invest in debt
securities rated below C, which are in default as to principal and/ or interest.
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 quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix" 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
Prospectus Page 26
<PAGE>
GT GLOBAL INCOME FUNDS
default by the issuer is significantly greater for the holders of lower quality
securities because such securities are generally unsecured and may be
subordinated to the claims of 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 Strategic Income Fund or the Portfolio. If an issuer exercises
these provisions in a declining interest rate market, the Strategic Income Fund
or the Portfolio may have to replace the security with a lower yielding
security, resulting in a decreased return for investors. In addition, the
Strategic Income Fund and the Portfolio may have difficulty disposing of lower
quality securities because there may be a thin trading market for such
securities. There may be no established retail secondary market for many of
these securities, and the Strategic Income Fund and the Portfolio anticipate
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 Strategic Income Fund and the Portfolio to obtain accurate
market quotations for purposes of valuing the securities in the portfolios of
the Strategic Income Fund and the Portfolio. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may also decrease the
values and liquidity of lower quality securities, especially in a thinly traded
market. The Strategic Income Fund and the Portfolio also may acquire lower
quality debt securities during an initial underwriting or may acquire lower
quality debt securities which are sold without registration under applicable
securities laws. Such securities involve special considerations and risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Strategic Income Fund and the Portfolio
will adversely impact net asset value of the Strategic Income Fund and the High
Income Fund. See "Risk Factors" in the Statement of Additional Information. In
addition to the foregoing, such factors may 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 Strategic Income Fund and the Portfolio each also may 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 Fund and the
Portfolio may have limited legal recourse in the event of a default. Debt
securities issued by governments in emerging markets can differ from debt
obligations issued by private entities in that remedies from defaults generally
must be pursued in the courts of the defaulting government, and legal recourse
is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
As of October 31, 1995, the Strategic Income Fund and the Portfolio had 70.7%
and 37.7%, respectively, of their total net assets in debt securities that
received a rating from Moody's and 26.2% and 56.3%, respectively, of their total
net assets in debt securities that were not so rated. In addition, the Strategic
Income Fund and the Portfolio had 3.1% and 6.0%, respectively, of their total
net assets in cash and cash items. The Strategic Income Fund had the following
percentages of its total net assets invested in rated securities: Aaa -- 35.4%,
Aa -- 9.6%, A -- 9.4%, Baa -- 0.7%, Ba -- 10.0%, B -- 5.6%, Caa -- 0%, Ca -- 0%,
C -- 0%. Included under the unrated category are securities comprising 26.2% of
the Strategic Income Fund's total net assets which, while unrated, have been
determined by LGT Asset Management to be of comparable quality to securities in
the following categories: Baa (4.2%); Ba (1.6%); and B (20.4%). The Portfolio
had the following percentages of its total net assets invested in rated
securities: Aaa -- 0%, Aa -- 0%, A -- 3.7%, Baa -- 3.4%, Ba -- 18.7%, B --
11.9%, Caa -- 0%, Ca -- 0%, C -- 0%. Included under the unrated category are
securities comprising 56.3% of the Portfolio's total net assets which, while
unrated, have been determined by LGT Asset Management to be of comparable
quality to securities in the following rating categories: Baa (11.3%); Ba
(5.2%); and B (39.8%). It should be noted that the allocation of the investments
of the Strategic Income Fund and the Portfolio by rating on any given date will
vary and should not be considered representative of the future portfolio
composition of the Strategic Income Fund or the Portfolio.
LGT Asset Management 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
objectives and policies of the Funds and the Portfolio and consider their
ability to assume the investment risks involved before making an investment in
either of those Funds.
Prospectus Page 27
<PAGE>
GT GLOBAL INCOME 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 1,000 employees; (b) any
account with assets of at least $25,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $25,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies comprising or affiliated with Liechtenstein
Global Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
Orders received by GT Global before the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on any
Business Day will be executed at the public offering price for the applicable
class of shares determined that day. A "Business Day" is any day Monday through
Friday on which the NYSE is open for business. All purchase orders will be
executed at the public offering price next determined after the purchase order
is received. The Funds and GT Global reserve the right to reject any purchase
order.
Fiduciaries and Financial Advisors may be required to provide information
satisfactory to GT Global concerning their eligibility to purchase Advisor Class
Shares. For specific information on opening an account, please contact your
Financial Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. Accordingly, a bank wire
received by the close of regular trading on the NYSE on a Business Day will be
effected that day. A wire investment is considered received when the Transfer
Agent is notified that the bank wire has been credited to the Funds. Prior
telephonic or facsimile notice that a bank wire is being sent must be provided
to the Transfer Agent. A bank may charge a service fee for wiring money to the
Funds. The Transfer Agent currently does not charge a service fee for
facilitating wire purchases, but reserves the right to do so in the future. For
more information, please refer to the Shareholder Account Manual in this
Prospectus.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing a Fund's shares will not be issued unless a written request is
submitted to the Transfer Agent. Shares of a Fund are recorded on a register by
the Transfer Agent, and shareholders who do not elect to receive certificates
have the same rights of ownership as if certificates had been issued to them.
Redemptions and exchanges by shareholders who hold certificates may take longer
to effect than similar transactions involving non-certificated shares because
the physical delivery and processing of properly executed certificates is
required. ACCORDINGLY, THE FUNDS AND GT GLOBAL RECOMMEND THAT SHAREHOLDERS DO
NOT REQUEST ISSUANCE OF CERTIFICATES.
Prospectus Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of any Fund may only be exchanged for Advisor Class shares
of other GT 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 GT Global Mutual Fund
shares to be acquired may be legally made. EXCHANGES ARE NOT TAX-FREE AND MAY
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 --
Taxes." In addition to than the Funds, the GT Global Mutual Funds currently
include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GTGLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL AMERICA GROWTH FUND
-- GTGLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL DOLLAR FUND
- --------------
* Formerly G.T. Global Latin America Growth Fund.
Up to four exchanges each year per Fund 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 exchanges. The Funds, GT
Global and the Transfer Agent will not be liable for any loss or damage for
acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact his or her Financial Advisor to request the prospectus
of the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus for
additional information.
OTHER INFORMATION ABOUT EXCHANGES. Purchases, redemptions and exchanges should
be made for investment purposes only. A pattern of frequent exchanges, purchases
and sales is not acceptable and can be limited by a Fund's or GT 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 29
<PAGE>
GT GLOBAL INCOME FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of each Fund 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 any Business Day will be
effected at the net asset value calculated on that day. Redemption requests will
not require a signature guarantee if the redemption proceeds are to be sent
either: (i) to the redeeming shareholder at the shareholder's address of record
as maintained by the Transfer Agent, provided the shareholder's address of
record has not been changed within the preceding thirty days; or (ii) directly
to a pre-designated bank, savings and loan or credit union account ("Pre-
Designated Account"). ALL OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A
SIGNATURE GUARANTEE OF THE REDEEMING SHAREHOLDER'S SIGNATURE. A signature
guarantee can be obtained from any bank, U.S. trust company, a member firm of a
U.S. stock exchange or a foreign branch of any of the foregoing or other
eligible guarantor institution. A notary public is not an acceptable guarantor.
Shareholders 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, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
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.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares
Prospectus Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
redeemed by telephone, or by mail will be made promptly after receipt of a
redemption request, if in good order, but not later than seven days after the
date the request is executed. Requests for redemption which are subject to any
special conditions or which specify a future or past effective date cannot be
accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check it can take up to 10 business days
to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders may be placed in accordance with this
Manual. PLEASE BE CAREFUL TO REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS
PROVIDED. See "How to Invest;" "How to Make Exchanges;" "How to Redeem Shares;"
and "Dividends, Other Distributions, and Federal Income Taxation -- Taxes" for
more information.
Each Fund's Transfer Agent is GT 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:
GT 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 GT 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: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global at 1-800-223-2138.
Prospectus Page 32
<PAGE>
GT GLOBAL INCOME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Funds calculate net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m., Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the High Income Fund is the value of its
investment in the Portfolio) subtracting all of its 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.
Long-term debt obligations held by a Fund or the Portfolio 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 LGT Asset Management 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. Equity securities are valued at
the last sale price on the exchange or in the OTC market in which such
securities are primarily traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. When market quotations for futures and options positions held by a Fund
or the Portfolio are readily available, those positions are valued based upon
such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolio's Board of
Trustees. Securities and other assets quoted in foreign currencies are valued in
U.S. dollars based on the prevailing exchange rates on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC dealer markets which may trade on days when the NYSE is
closed (such as Saturday). As a result, the net asset values 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 pays monthly dividends from its net
investment income, if any, which includes accrued interest, earned discount
(including both original issue and market discounts) and dividends less
applicable expenses. Each Fund also annually distributes substantially all of
its realized net short-term capital gain (the excess of short-term capital gains
over short-term capital losses), net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net gains from foreign
currency transactions, if any. Each Fund may make an additional dividend or
other distribution if necessary to avoid a 4% excise tax on certain
undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares of a Fund will be higher than the
per share income dividends on shares of other classes of that Fund as a result
of the service and distribution fees applicable to those other shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the distributing Fund (or other GT Global
Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
Prospectus Page 33
<PAGE>
GT GLOBAL INCOME FUNDS
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE DISTRIBUTING FUND.
Reinvestments in another GT Global Mutual Fund may only be directed to an
account with the identical shareholder registration and account number. These
elections may be changed by a shareholder at any time; to be effective with
respect to a distribution, the shareholder or the shareholder's broker must
contact the Transfer Agent by mail or telephone at least 15 Business Days prior
to the payment date. THE FEDERAL INCOME TAX STATUS OF DIVIDENDS AND OTHER
DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders. The Portfolio expects that it also will not be
liable for any federal income tax.
Dividends from a Fund's investment company taxable income 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 GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. In addition, if shares of a Fund
are purchased within 30 days before or after redeeming other shares of that Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors are therefore urged to consult their
tax advisers.
Prospectus Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolio,
respectively, and have approved contracts with various financial organizations
to provide, among other things, day to day management services required by the
Funds and the Portfolio. See "Directors, Trustees, and Executive Officers" in
the Statement of Additional Information for a complete description of the
Directors of each of the Funds and the Trustees of the Portfolio. A majority of
the disinterested members of the Board of Directors of the Company and the Board
of Trustees of the Portfolio have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest up to and including
creating a separate Board of Trustees for the Portfolio.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as the Government Income Fund's, the Strategic Income Fund's and the
Portfolio's investment manager and administrator include, but are not limited
to, determining the composition of the investment portfolio of the Government
Income Fund, the Strategic Income Fund and the Portfolio and placing orders to
buy, sell or hold particular securities. In addition, LGT Asset Management
provides the following administration services to the Funds and the Portfolio:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Government
Income Fund's, the Strategic Income Fund's and the Portfolio's operation.
The Government Income Fund and the Strategic Income Fund each pays LGT Asset
Management administration fees computed daily and payable monthly, based on
their respective average daily net assets, for such services at the annualized
rate of .725% on the first $500 million, .70% on the next $1 billion, .675% on
the next $1 billion, and .65% on amounts thereafter. The High Income Fund pays
administration fees, directly to LGT Asset Management at the 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
the Portfolio to LGT Asset Management. The Portfolio pays such fees, based on
the average daily net assets of the Portfolio, directly to LGT Asset Management
at the annualized rate of .475% on the first $500 million, .45% on the next $1
billion, .425% on the next $1 billion and .40% on amounts thereafter, plus 2% of
the Portfolio's total investment income as stated in the Portfolio's Statement
of Operations, calculated in accordance with generally accepted accounting
principles, adjusted daily for currency revaluations, on a marked to market
basis, of the Portfolio's assets; provided, however, that during any fiscal year
this amount shall not exceed 2% of the Portfolio's total investment income
calculated in accordance with generally accepted accounting principles. These
rates are higher than those paid by most mutual funds. Each Fund pays all
expenses not assumed by LGT Asset Management, GT Global or any other agents. LGT
Asset Management and GT Global have undertaken to limit the expenses of the
Advisor Class shares of the Government Income Fund and the Strategic Income Fund
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual level of 1.50% of the average daily net assets of each
such Fund's Advisor Class shares. LGT Asset Management and GT Global have
undertaken to limit the expenses of the High Income Fund's Advisor Class shares
(and such Fund's pro-rata portion of the Portfolio's expenses) to the maximum
annual level of 1.85% of the average daily net assets of such Fund's Advisor
Class shares.
LGT Asset Management also serves as each Fund's pricing and accounting agent.
The monthly fee for these services to LGT Asset Management is a percentage, not
to exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates
Prospectus Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of LGT Asset Management are located at 50 California Street, 27th
Floor, San Francisco, California 94111.
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consist of
GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing GT Global Mutual Funds, LGT
Asset Management employs a team approach, taking advantage of the resources of
these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
The investment professionals primarily responsible for the portfolio management
of the Government Income Fund, the Strategic Income Fund and the Portfolio are
as follows:
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Robert F. Allen Portfolio Manager since Portfolio Manager for LGT Asset Management since 1989.
San Francisco 1989
STRATEGIC INCOME FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Portfolio Manager and Economist for LGT Asset Management since
San Francisco 1992 1992. From 1991 to 1992, Mr. Nocera was Senior Vice President and
Director for Global Fixed Income Research at The Putnam Companies;
Prior thereto, he was a Financial Economist at the International
Monetary Fund.
Nikos G. Pappayliou Portfolio Manager since Trader -- Global Fixed Income Investments for LGT Asset Management
San Francisco 1994 from 1993 to 1994. From 1991 to 1992, Mr. Pappayliou was European
Fixed Income Arbitrageur for Swiss Bank (London). Prior thereto,
he was Fixed Income Arbitrageur for Credit Lyonnais (Paris).
</TABLE>
Prospectus Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
<TABLE>
<CAPTION>
HIGH INCOME PORTFOLIO
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO LAST FIVE YEARS
- -------------------- -------------------- ------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager Portfolio Manager and Economist for LGT Asset
San Francisco since Portfolio Management since 1992. From 1991 to 1992, Mr. Nocera
inception in 1992 was Senior Vice President and Director for Global
Fixed Income Research at The Putnam Companies; Prior
thereto, Mr. Nocera was a Financial Economist at the
International Monetary Fund.
</TABLE>
In placing orders for the Government Income Fund's, Strategic Income Fund's and
the Portfolio's securities transactions, LGT Asset Management seeks to obtain
the best net results. LGT Asset Management has no agreement or commitment to
place orders with any broker-dealer. Commissions or discounts in foreign
securities exchanges and 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 governmental 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 occassion, 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 the best net
results, LGT Asset Management may consider a broker/dealer's sale of shares of
the GT Global Mutual Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions for the Fund may be
executed through any Liechtenstein Global Trust affiliate.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of each Fund's Advisor Class shares. Like LGT Asset Management, GT
Global is a subsidiary of Liechtenstein Global Trust with offices at 50
California Street, 27th Floor, San Francisco, California 94111.
LGT Asset Management or an affiliate thereof may make ongoing payments to
Financial Advisors and others that facilitate the administration and servicing
of Advisor Class shareholder accounts.
GT Global, at its own expense, may also provide promotional incentives to
brokers that sell shares of the Funds and/or shares of the other GT Global
Mutual Funds. In some instances compensation or promotional incentives may be
offered to brokers that have sold or may sell significant amounts of shares
during specified periods of time. Such compensation and incentives may include,
but are not limited to, cash, merchandise, trips and financial assistance to
brokers in connection with preapproved conferences or seminars, sales or
training programs for invited sales personnel, payment for travel expenses
(including meals and lodging) incurred by sales personnel and members of their
families or other invited guests to various locations for such seminars or
training programs, seminars for the public, advertising and sales campaigns
regarding one or more of the GT Global Mutual Funds, and/or other events
sponsored by the broker.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. 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 37
<PAGE>
GT GLOBAL INCOME 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, a
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to a Fund's
automatic dividend reinvestment program may be provided quarterly. Shortly after
the end of each Fund's fiscal year on October 31 and fiscal half-year on April
30 of each year, shareholders receive an annual and a semiannual report,
respectively. These reports list the securities held by the Fund and include the
Fund's financial statements. Under certain circumstances, duplicate mailings of
such reports to the same household may be consolidated. In addition, the federal
income status of distributions made by the Fund to shareholders are reported
after the end of each calendar year on Form 1099-DIV.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
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 the Fund's shareholders individually when the matter affects the
specific interest of the 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 all
the Company's funds will be voted in the aggregate on all other matters, such as
the election of Directors and ratification of the Board of Directors' selection
of the Company's independent accountants.
Normally there will be no annual meeting of shareholders of the Company in any
year, except as required under the 1940 Act. The Company would be required to
hold a shareholders' meeting in the event that at any time less than a majority
of the Directors holding office had been elected by shareholders. Directors
shall continue to hold office until their successors are elected and have
qualified. Shares of the Company's funds do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the election
of Directors can elect all the Directors. A Director may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting 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 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 0.35% of
the average daily net assets of that class. For the fiscal year ended October
31, 1995, total operating expenses for the Class A shares were 1.45% for
Strategic Income Fund, 1.38% for Government Income Fund, and 1.75% for High
Income Fund.
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, 1995,
total operating expenses for the Class B shares were 2.10% for Strategic Income
Fund, 2.03% for Government Income Fund, and 2.40% for High Income Fund, 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
Prospectus Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
than that of the Class A and B shares of that Fund because of the higher
expenses borne by the Class A and B shares. The per share dividends on Advisor
Class shares of a Fund will generally be higher than the per share dividends on
Class A and B shares of that Fund as a result of the service and distribution
fees applicable with respect to Class A and B shares. Consequently, during
comparable periods, the Funds expect that the total return on an investment in
shares of the Advisor Class will be higher than the total return on Class A or B
shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of the
Strategic Income Fund and the High Income Fund; 100 million shares of each Fund
have been classified as Class A and Class B shares, respectively. In addition,
500 million shares have been classified as shares of Government Income Fund; 200
million shares have each been classified as Class A and Class B shares,
respectively. Moreover, 100 million shares have been classified as Advisor Class
shares for each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of a Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of a Fund is equal as to earnings, assets and voting privileges, except as
noted above, and each class bears the expenses related to the distribution of
its shares. Shares of each Fund when issued are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a trust under the
laws of the state of New York. The Portfolio's Declaration of Trust provides
that the High Income Fund and other entities investing in the 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 the
Portfolio. However, the Directors of the Company believe that the risk of the
High Income Fund incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance existed and the
Portfolio itself was unable to meet its obligations, and that neither the High
Income Fund nor its shareholders will be exposed to a material risk of liability
by reason of the High Income Fund's investing in the Portfolio. Any information
received from the Portfolio in the Portfolio shareholder report will be provided
to the High Income Fund's shareholders.
Whenever the High Income Fund is requested to vote on any proposal of the
Portfolio, the High Income Fund will hold a meeting of Fund shareholders and
will cast its vote as instructed by Fund shareholders. Because Portfolio
investors' votes are proportionate to their percentage interests in the
Portfolio, one or more other Portfolio investors could, in certain instances,
approve an action against which a majority of the outstanding voting securities
of the Fund had voted. This could result in the Fund's redeeming its investment
in the Portfolio, which could result in increased expenses for the High Income
Fund. Shares for which no voting instructions are received will be voted in the
same proportion as the shares for which voting instructions are received. Any
information received from the Portfolio in the Portfolio's report to
shareholders will be provided to shareholders of the High Income Fund.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at 50 California Street,
27th Floor, San Francisco, CA 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their 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. Investors should be aware that as of October 22, 1992,
the investment objectives of the Strategic Income Fund were changed from
long-term high capital appreciation, primarily and moderate income, secondarily,
to primarily high current income and secondarily capital appreciation. In
addition, the investment policies and limitations of the Strategic Income Fund
were modified.
In such materials, each Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the
Prospectus Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
reinvestment date as established by the Board of Directors.
In addition, in order to more completely represent each Fund's performance or
more accurately compare such performance to other measures of investment return,
each Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
Each Fund also may refer in advertising and promotional materials to its yield,
which will fluctuate over time. A Fund's yield shows the rate of income that it
earns on its investments, expressed as a percentage of the public offering price
of its shares. A Fund calculates yield by determining the interest income it
earned from its portfolio investments for a specified thirty-day period (net of
expenses), dividing such income by the average number of shares outstanding, and
expressing the result as an annualized percentage based on the public offering
price at the end of that thirty-day period. Yield accounting methods differ from
the methods used for other accounting purposes. Accordingly, a Fund's yield may
not equal the dividend income actually paid to investors or the income reported
in its financial statements. Yield is calculated separately for Class A, Class B
and Advisor Class shares of each Fund.
Each Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. A Fund's investment results will
vary from time to time depending upon market conditions, the composition of its
portfolio and its operating expenses. These factors and possible differences in
calculation methods should be considered when comparing a Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. Each Fund's results also should be considered
relative to the risks associated with its investment objectives and policies.
See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global, a
subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek,
California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of each Fund's and the Portfolio's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company, the Funds and
the Portfolio. Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset
Management, GT Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's and the Portfolio's
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 each Fund and the Portfolio, assist in the preparation of each Fund's and the
Portfolio's federal and state income tax returns and consult with the Company,
each Fund and the Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the 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 exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear somewhat
larger.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa -- Medium-grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- 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 that are not rated as a
matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
Prospectus Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the company ranks in the lower end of its generic
rating category.
STANDARD & POOR'S RATINGS SERVICES ("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 -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
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 volnerability 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 which 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" 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. The "D" rating also will be
used upon 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
categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper having a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the
Prospectus Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
ability for repayment of Senior short-term debt obligations. This normally will
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from
"A1" for the highest quality obligations to "D" for the lowest. Issues in the
"A" category are delineated with numbers 1, 2, and 3 to indicate the relative
degree of safety. A-1 -- This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus sign (+)
designation. A-2 -- Capacity for timely payments on issues with this designation
is satisfactory; however, the relative degree of safety is not as high as for
issues designated "A-1."
Prospectus Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 44
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 46
<PAGE>
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ADVISOR CLASS
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
[LGT LOGO]
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for
Uniform Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under
which the custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $500 minimum initial investment for each Fund is required. Checks should be made payable to "GT GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 413 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
405 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 424 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
416 / / GT GLOBAL EMERGING MARKETS FUND $ 406 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
411 / / GT GLOBAL HEALTH CARE FUND $ 423 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
415 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 404 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / GT GLOBAL INFRASTRUCTURE FUND $ 410 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / GT GLOBAL FINANCIAL SERVICES FUND $ 409 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / GT GLOBAL NATURAL RESOURCES FUND $ 408 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / GT GLOBAL CONSUMER PRODUCTS $ 418 / / GT GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
402 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 401 / / GT GLOBAL DOLLAR FUND $
---------- ----------
403 / / GT GLOBAL EUROPE GROWTH FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND
I/WE AGREE TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS'
TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC
INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH LOSS OR
DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE INVESTOR(S)
CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS
AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL GT GLOBAL, INC., G.T.
GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS,
INC. OR THE FUNDS' TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR
REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME
CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE
GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name
- ------------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the GT Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
GT Global, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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 LGT ASSET MANAGEMENT, INC., G.T.
INVESTMENT FUNDS, INC., GT GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL
STRATEGIC INCOME FUND, GT GLOBAL HIGH INCOME FUND, GLOBAL HIGH INCOME
PORTFOLIO, OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
INCPV602006MC
<PAGE>
GT GLOBAL GROWTH & INCOME FUND:
ADVISOR CLASS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
GT GLOBAL GROWTH & INCOME FUND ("FUND") is a mutual fund, organized as a
non-diversified series of G.T. Investment Funds, Inc., which seeks long-term
capital appreciation together with current income. The Fund invests in a global
portfolio of both equity and debt securities, in such relative proportions as
deemed most appropriate by the Fund's investment manager in view of then-current
economic and market conditions. There can be no assurance that the Fund will
achieve its investment objective.
The Fund's investment manager, LGT Asset Management, Inc. ("LGT Asset
Management") and its worldwide affiliates, are part of Liechtenstein Global
Trust, a provider of global asset management and private banking products and
services to individual and institutional investors.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission ("SEC") and is incorporated herein
by reference. The Statement of Additional Information which may be amended or
supplemented from time to time, is available without charge by writing to the
Fund at 50 California Street, San Francisco, California 94111, or by calling
(800) 824-1580.
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.
An investment in the GT Global Growth & Income Fund offers the following
advantages:
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Automatic Dividend and Other Distribution Reinvestment at No Additional
Sales Charge
/ / Exchange Privileges with the Advisor Class of the Other GT Global Mutual
Funds
FOR FURTHER INFORMATION, CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL GROWTH & INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
How To Invest............................................................................. 12
How To Make Exchanges..................................................................... 13
How To Redeem Shares...................................................................... 14
Shareholder Account Manual................................................................ 16
Calculation of Net Asset Value............................................................ 17
Dividends, Other Distributions and Federal Income Taxation................................ 17
Management................................................................................ 19
Other Information......................................................................... 21
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
Investment Objective: The Fund seeks long-term capital appreciation together with current income
Principal Investments: Invests principally in blue-chip equity securities and high
quality government bonds of issuers located in the United States
and throughout the world
Investment Manager: LGT Asset Management is part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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
Advisor Class shares: least 1,000 employees; (b) any account with assets of at least
$25,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $25,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies comprising or affiliated with the Liechtenstein
Global Trust; and (e) any of the companies comprising or
affiliated with the Liechtenstein Global Trust
Exchange Privileges: Advisor Class shares may only be exchanged for Advisor Class
shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by LGT
Asset Management
Dividends and Other Dividends paid quarterly from net investment income and realized
Distributions: net short-term capital gains; other distributions paid annually
from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the Fund or of other GT Global Mutual
Funds
Net Asset Value: Advisor Class shares are expected to be quoted daily in the
financial section of most newspapers
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comprising Liechtenstein Global Trust are indirect subsidiaries of the Prince of
Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVE AND POLICIES. The Fund seeks its objective of long-term
capital appreciation together with current income by investing in a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets. The Fund currently expects to choose its investments
principally from issuers in the United States, Canada, Japan, the Western
European nations, New Zealand and Australia. See "Investment Objective and
Policies." Consistent with the Fund's investment objective, LGT Asset Management
employs a conservative investment style in managing the Fund's assets, in order
to attempt to limit volatility and risk to capital.
The Fund seeks its investment objective by normally investing at least 65% of
its total assets in a combination of blue-chip equity securities and high
quality government bonds. The remainder of the Fund's assets may be invested in
other equity securities and investment grade government and corporate debt
securities which LGT Asset Management believes will assist the Fund in achieving
its objective. The relative proportions of equity and debt securities held by
the Fund at any one time will vary, depending upon LGT Asset Management's
assessment of global political and economic conditions and the relative
strengths and weaknesses of the world equity and debt markets. To enable the
Fund to respond to economic and market changes, the Fund is authorized to invest
up to 100% of its assets in either equity or debt securities.
INVESTMENT TECHNIQUES AND RISK FACTORS. The Fund 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. The Fund's participation in the currency, options and
futures markets involves certain risks and transaction costs.
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 Fund's net asset value, earnings and
gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than securities of
comparable U.S. companies.
There is no assurance that the Fund will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions. The value of the debt securities held by the
Fund generally fluctuates inversely with interest rate movements. Certain
investment grade debt securities may possess speculative qualities.
PURCHASES AND REDEMPTIONS. Advisor Class shares of the Fund's common stock are
available through Financial Advisors (as defined herein) that have entered into
agreements with the Fund's distributor, GT Global, Inc. ("GT Global") or certain
of its affiliates. See "How to Invest" and "Shareholder Account Manual." Shares
may be redeemed through the Fund's transfer agent, GT Global Investor Services,
Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Prospectus Page 4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following tables*:
<TABLE>
<CAPTION>
ADVISOR CLASS
---------------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum contingent deferred sales charge............................................................... None
Redemption charges..................................................................................... None
Exchange Fees:
-- On first four exchanges each year................................................................. None
-- On each additional exchange....................................................................... $ 7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.97%
12b-1 service and distribution fees.................................................................... None
Other expenses......................................................................................... 0.42%
-------
Total Fund Operating Expenses............................................................................ 1.39%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return*:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $13 $44 $ 97 $175
</TABLE>
- --------------
* BECAUSE ADVISOR CLASS SHARES WERE NOT OFFERED PRIOR TO JUNE 1, 1995,
EXPENSES ARE ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES.
SUCH DATA ARE DERIVED FROM CLASS A AND CLASS B EXPENSES FOR THE FUND BASED
ON THE FUND'S FISCAL YEAR ENDED OCTOBER 31, 1995. THESE TABLES ARE INTENDED
TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS COSTS AND EXPENSES
ASSOCIATED WITH INVESTING IN THE FUND. "Other expenses" include custody,
transfer agent, legal, audit and other expenses. See "Management" herein and
the Statement of Additional Information for more information. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust invests
in Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT
A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above tables and the assumption in the
Hypothetical Example of a 5% annual return are required by regulation of the
Securities and Exchange Commission applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's
projected or actual performance.
Prospectus Page 5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed 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, 1995 and each
of the preceeding five reporting periods have been audited by Coopers & Lybrand
L.L.P., independent accountants, whose report thereon also is included in the
Statement of Additional Information.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------------
SEPTEMBER 25, 1990
(COMMENCE-
YEAR ENDED OCTOBER 31, MENT OF
---------------------------------------------------------- OPERATIONS) TO
1995 1994 1993(A) 1992 1991 OCTOBER 31, 1990
--------- --------- ---------- --------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................... $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77 $ 4.76
--------- --------- ---------- --------- --------- -------
Income from investment opera-
tions:
Net investment income............. 0.24 0.22 0.24* 0.21* 0.27* 0.01*
Net realized and unrealized gain
(loss) on investments............ 0.13 (0.03) 1.05 0.10 0.47 --
--------- --------- ---------- --------- --------- -------
Net increase (decrease) from
investment operations............ 0.37 0.19 1.29 0.31 0.74 0.01
--------- --------- ---------- --------- --------- -------
Distributions:
Net investment income........... (0.22) (0.21) (0.24) (0.14) (0.26) --
Net realized gain on
investments.................... (0.01) (0.06) -- (0.14) -- --
Sources other than net income... -- -- (0.04) -- -- --
--------- --------- ---------- --------- --------- -------
Total distributions........... (0.23) (0.27) (0.28) (0.28) (0.26) --
--------- --------- ---------- --------- --------- -------
Net asset value, end of period.... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
--------- --------- ---------- --------- --------- -------
--------- --------- ---------- --------- --------- -------
Total investment return (e)....... 6.27% 3.14% 25.1% 5.9% 15.68% 0.2%(b)
--------- --------- ---------- --------- --------- -------
--------- --------- ---------- --------- --------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)........................... $ 284,069 $ 317,847 $ 251,428 $ 27,754 $ 71,376 $9,486
Ratio of net investment income to
average net assets............... 3.85% 3.30% 3.3%* 4.1%* 5.0%* 2.9%*(c)
Ratio of expenses to average net
assets:
With expense reductions......... 1.70% 1.67% 1.8%* 1.9%* 1.9%* 0.6%*(c)
Without expense reductions...... 1.74% --%(f) --%(f) --%(f) --%(f) --%(f)
Portfolio turnover rate+++........ 83% 117% 24% 53% 46% none
<CAPTION>
CLASS B++ ADVISOR CLASS**
----------------------------------------------------- ------------------
OCTOBER 22, JUNE 1, 1995
YEAR ENDED OCTOBER 31, 1992 TO TO
--------------------------------------- OCTOBER 31, OCTOBER 31,
1995 1994 1993(A) 1992(A) 1995
----------- ----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................... $ 6.21 $ 6.29 $ 5.28 $ 5.29 $ 6.24
----------- ----------- ----------- ----------- -------
Income from investment opera-
tions:
Net investment income............. 0.20 0.18 0.20 0.01 0.11
Net realized and unrealized gain
(loss) on investments............ 0.13 (0.03) 1.05 (0.02) 0.13
----------- ----------- ----------- ----------- -------
Net increase (decrease) from
investment operations............ 0.33 0.15 1.25 (0.01) 0.24
----------- ----------- ----------- ----------- -------
Distributions:
Net investment income........... (0.18) (0.17) (0.20) -- (0.13)
Net realized gain on
investments.................... (0.01) (0.06) -- -- --
Sources other than net income... -- -- (0.04) -- --
----------- ----------- ----------- ----------- -------
Total distributions........... (0.19) (0.23) (0.24) -- (0.13)
----------- ----------- ----------- ----------- -------
Net asset value, end of period.... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 6.35
----------- ----------- ----------- ----------- -------
----------- ----------- ----------- ----------- -------
Total investment return (e)....... 5.57% 2.48% 24.3% (0.2)%(b) 3.83%(b)
----------- ----------- ----------- ----------- -------
----------- ----------- ----------- ----------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)........................... $ 356,796 $ 359,242 $ 150,768 $ 280 944
Ratio of net investment income to
average net assets............... 3.20% 2.65% 2.6% N/A(d) 4.20%(c)
Ratio of expenses to average net
assets:
With expense reductions......... 2.35% 2.32% 2.5% N/A(d) 1.35%(c)
Without expense reductions...... 2.39% --%(f) --%(f) --%(f)(d) 1.39%(c)
Portfolio turnover rate+++........ 83% 117% 24% 53% 83%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992 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 LGT Asset Management, Inc. of Fund operating
expenses of $0.005, $0.02, $0.03 and $0.01 for the years ended October 31,
1993, 1992, 1991 and for the period from September 25, 1990 to October 31,
1990, respectively. Without such reimbursements, the expense ratios would
have been 1.93%, 2.20%, 2.46% and 2.40% and the net investment income to
average net assets would have been 3.20%, 3.70%, 4.40% and 1.04% for the
years ended October 31, 1993, 1992, 1991 and for the period from September
25, 1990 to October 31, 1990, respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the year.
(b) Not annualized.
(c) Annualized.
(d) Ratios are not meaningful due to short period of operation of Class B
shares.
(e) Total investment return does not include sales charges.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 6
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation together with
current income. The Fund seeks its objective by investing in a global portfolio
of both equity and debt securities, allocated among diverse international
markets. See "Investment Objective and Policies -- Risk Factors." There is no
assurance that the Fund's investment objective will be achieved.
Consistent with the Fund's investment objective, LGT Asset Management employs a
conservative investment style in managing the Fund's assets. In so doing LGT
Asset Management attempts to limit volatility and risk to capital.
At least 65% of the Fund's total assets normally will be invested in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; AND (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are deemed
to be high quality if at the time of the Fund's investment they are rated within
one of the two highest ratings categories of Moody's Investors Service, Inc.
("Moody's") or by Standard & Poor's Ratings Services ("S&P") or, if not rated,
are deemed to be of equivalent quality in the judgment of LGT Asset Management.
Up to 35% of the Fund's total assets may be invested in other equity securities
and investment grade government and corporate debt obligations which LGT Asset
Management believes will assist the Fund in achieving its objective. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories of Moody's or S&P, or, if not rated, deemed to be of
equivalent quality in the judgment of LGT Asset Management.
The equity securities in which the Fund may invest include common stocks,
preferred stocks and warrants to acquire such stocks and other equity
securities. Government bonds that the Fund may purchase include debt obligations
issued or guaranteed by the United States or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. Such government securities also may include debt obligations
of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank. The debt
obligations held by the Fund may include debt obligations convertible into
equity securities or having attached warrants or rights to purchase equity
securities.
The Fund currently contemplates that it will invest principally in securities of
issuers in the United States, Canada, Japan, the Western European nations, New
Zealand and Australia. The Fund may invest substantially in securities
denominated in one or more currencies. Under normal conditions, the Fund invests
in issuers of not less than three different countries and issuers of any one
country, other than the United States, will represent no more than 40% of the
Fund's total assets. The Fund may purchase securities that are issued by the
government or a corporation or financial institution of one nation but
denominated in the currency of another nation (or a multinational currency
unit).
According to LGT Asset Management, as of December 31, 1995, approximately 67% of
the total equity market capitalization worldwide was represented by non-U.S.
equity securities, and as of December 31, 1995, more than 65% of the value of
all outstanding government debt obligations throughout the world was represented
by obligations denominated in currencies other than the U.S. dollar. Moreover,
from time to time the equity and debt securities of issuers located outside the
United States have substantially outperformed the equity and debt securities of
U.S. issuers. Accordingly, LGT Asset Management believes that the Fund's policy
of investing in equity and debt securities of issuers throughout the world may
enable the achievement of results superior to those produced by mutual funds
with similar objectives to that of the Fund that invest solely in U.S. equity
and debt securities.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. LGT Asset Management allocates
the Fund's assets among securities of countries and in currency
Prospectus Page 7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
denominations where opportunities for meeting the Fund's investment objective
are expected to be the most attractive. The relative proportions of equity and
debt securities held by the Fund at any one time will vary, depending upon LGT
Asset Management's assessment of global political and economic conditions and
the relative strengths and weaknesses of the world equity and debt markets. To
enable the Fund to respond to general economic changes and market conditions
around the world, the Fund is authorized to invest up to 100% of its total
assets in either equity securities or debt securities.
LGT Asset Management attempts to identify those countries and industries where
economic and political factors are likely to produce above-average growth rates
and to further identify companies in such countries and industries that are best
positioned and managed to benefit from these factors. In evaluating possible
equity investments, LGT Asset Management attempts to identify and acquire only
securities it deems to represent high or improving investment quality.
Securities representing high investment quality generally will include those of
well-known, established and successful issuers that LGT Asset Management
believes will continue to be successful in the future. Securities representing
improving investment quality may include those of an issuer which, for instance,
has improved its sales or earnings or of an issuer the balance sheet and
financial condition of which is improving. LGT Asset Management seeks to avoid
investing in equity securities that appear overly speculative or risky, even if
they have attractive features or investment potential.
In evaluating debt securities considered for the Fund, LGT Asset Management
analyzes their yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding local and world economies,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. LGT
Asset Management may increase the average maturity of the portion of the Fund's
portfolio invested in debt securities when it expects interest rates to decline,
and may decrease such maturity when it expects interest rates to rise. There are
no limitations on the maximum or minimum maturities of the debt securities
considered by the Fund or on the average weighted maturity of the debt portion
of the Fund's portfolio.
Should the rating of any debt security be revised while such security is owned
by the Fund, LGT Asset Management will evaluate what action, if any, is
appropriate with respect to such security. A description of the Moody's and S&P
ratings is included in the "Appendix" to the Statement of Additional
Information.
LGT Asset Management generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation and interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, if the exchange rate of the foreign currency
declines, the dollar value of the security will decrease. However, the Fund may
seek to protect itself against such negative currency movements by engaging in
hedging techniques through the use of options, futures and forward currency
contracts. These instruments are often referred to as "derivatives." See
"Options, Futures and Forward Currency Transactions."
OTHER POLICIES. The Fund may invest up to 10% of its net assets in illiquid
securities and other securities for which no readily available market exists,
and up to 5% of its total assets in a combination of securities purchased on a
when-issued basis or with respect to which it has entered into forward
commitment agreements.
TEMPORARY DEFENSIVE STRATEGIES. The Fund retains the flexibility to respond
promptly to changes in market and economic conditions. Accordingly, in the
interest of preserving shareholders' capital, LGT Asset Management may employ a
temporary defensive investment strategy if it determines such a strategy to be
warranted due to market conditions. Under a defensive strategy, the Fund may
hold cash (U.S. dollars, foreign currencies or multinational currency units)
and/or invest any portion or all of its assets in high quality money market
instruments of U.S. or foreign government or corporate issuers, and most or all
of the Fund's investments may be made in the United States and denominated in
U.S. dollars. To the extent the Fund adopts a temporary defensive posture, it
will not be invested so as to directly achieve its investment objective. In
addition, pending investment of proceeds from new sales of Fund shares or in
order to meet ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in foreign or
domestic high quality money market
Prospectus Page 8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
instruments. Money market instruments in which the Fund 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 relating to any of the foregoing.
BORROWING AND SECURITIES LENDING. From time to time, it may be advantageous for
the Fund to borrow money rather than sell existing portfolio positions to meet
redemption requests. Accordingly, the Fund may borrow from banks or may borrow
through reverse repurchase agreements and "roll" transactions in connection with
meeting requests for the redemption of Fund shares. The Fund also may borrow up
to 5% of its total assets for temporary or emergency purposes other than to meet
redemptions. However, the Fund will not borrow for leverage purposes nor will
the Fund purchase securities while borrowings in excess of 5% of the Fund's
total assets are outstanding. See "Investment Objective and Policies" in the
Statement of Additional Information.
The Fund is authorized to make loans of its portfolio securities to
broker/dealers or to other institutional investors. The borrower must maintain
with the Fund's custodian collateral consisting of cash, U.S. government
securities or other liquid, high grade debt securities equal to at least 100% of
the value of the borrowed securities, plus any accrued interest. The Fund will
receive any interest paid on the loaned securities and a fee and/or a portion of
the interest earned on the collateral. Income received in connection with
securities lending may be used to offset the Fund's custody fees. The Fund will
limit its loans of portfolio securities to an aggregate of 30% of the value of
its total assets, measured at the time any such loan is made. The risks in
lending portfolio securities, as with other extensions of secured credit,
consist of possible delays in receiving additional collateral or in recovery of
the securities and possible loss of rights in the collateral should the borrower
fail financially.
RISK FACTORS. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions. Equity securities, particularly
common stocks, generally represent the most junior position in an issuer's
capital structure, and entitle holders to an interest in the assets of an
issuer, if any, remaining after all more senior claims have been satisfied. In
addition, the value of debt securities held by the Fund generally will fluctuate
with changes in the perceived creditworthiness of the issuers of such securities
and movements in interest rates. Further, investments in foreign government
securities involve special risks, including the risk that the governmental
issuers may be unable or unwilling to repay principal and interest when due.
Investment grade debt securities rated Baa by Moody's are described by Moody's
as having speculative characteristics, and therefore may be affected by economic
conditions and changes in the circumstances of their issuers to a greater extent
than higher rated bonds.
The Fund normally will invest in a substantial number of issuers; however, the
Fund has registered under the 1940 Act as a "non-diversified" mutual fund so
that it will be able to invest, with respect to 50% of its assets, more than 5%
of its assets in the securities of a single issuer. Since, as a
"non-diversified" fund, the Fund is permitted to invest a greater proportion of
its assets in the securities of a smaller number of issuers, the value of the
Fund's shares may fluctuate more widely and the Fund may be subject to greater
investment and credit risk with respect to its portfolio than a fund which is
diversified.
FOREIGN INVESTING. 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 Fund's net investment
income from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Fund's 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 Fund, political or social instability, or diplomatic or
economic developments which could affect the Fund's 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. LGT
Prospectus Page 9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Asset Management will rely on its worldwide financial and investment expertise
to attempt to limit these risks.
Since the Fund may invest substantially in securities denominated in foreign
currencies, and since the Fund may hold foreign currencies, the Fund will be
affected favorably or unfavorably by exchange control regulations or changes in
the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of the Fund's shares, and also
may affect the value of dividends and interest earned by the Fund and gains and
losses realized by the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities, this strategy will be
employed only when, in the opinion of LGT Asset Management, the size of the
premium the Fund receives for writing the option is adequate to compensate the
Fund against the risk that appreciation in the underlying security may not be
fully realized if the option is exercised. The Fund also is authorized to write
put options to attempt to enhance return, although it does not have the current
intention of so doing.
In seeking to protect against currency exchange rate or interest rate changes
that are adverse to its present or prospective positions, the Fund may employ
certain risk management practices involving the use of forward currency
contracts, futures contracts, options on securities, options on currencies,
options on indices and options on futures contracts to attempt to reduce the
overall level of investment risk normally associated with the Fund. 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). The Fund may enter into such instruments up to the full value of
its portfolio assets. There can be no assurance that the Fund's risk management
policies will succeed. These techniques are described below and are detailed
further in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar, or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. For example, when the Fund anticipates making a
purchase or sale of a security, the Fund 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 LGT Asset Management believes that a particular
currency may decline compared to the U.S. dollar or another currency, the Fund
may enter into a forward contract to sell the currency LGT Asset Management
expects to decline in an amount approximating the value of some or all of the
Fund's portfolio securities denominated in a foreign currency.
The Fund also may purchase and sell put and call options on currencies to hedge
against movements in exchange rates. Premiums paid for currency options held by
the Fund may not exceed 5% of the Fund's total assets. The Fund may also
purchase and sell currency futures contracts and options on such futures
contracts to hedge the Fund's portfolio against movements in foreign currency
exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that LGT Asset Management intends to include in
the Fund's portfolio. The Fund also may write call and put options and buy put
and call options on stock indices. Such stock index options serve to hedge
against overall fluctuations in the securities markets or in a specific market
sector, rather than anticipated increases or decreases in the value of a
particular security.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may buy index futures contracts and purchase
call options or write put options on such contracts to hedge against a general
market or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. Similarly, the Fund 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, the Fund may write and purchase put and call options on securities,
currencies and
Prospectus Page 10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
indices that are traded on recognized securities exchanges and over-the-counter
("OTC") markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), limit the extent to which the Fund may enter into forward contracts,
futures contracts, or engage in options transactions. See "Taxes" in the
Statement of Additional Information.
Although the Fund 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 LGT Asset Management's ability to predict
movements in the prices of individual securities, fluctuations in the general
securities markets and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
forward contracts, options, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that the skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) the 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 the Fund to purchase or sell a portfolio security at a time when it
would otherwise be favorable for it to do so, or the possible need for the Fund
to sell a security at a disadvantageous time, due to the need for the Fund to
maintain "cover" or to set aside securities in connection with hedging
transactions; and (6) the possible need to defer closing out certain options,
futures contracts and options thereon and forward currency contracts in order to
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 LGT Asset Management incorrectly forecasts securities market
movements, currency exchange rates or interest rates in utilizing a strategy for
the Fund, the Fund would be in a better position if it had not hedged at all.
The Fund 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.
OTHER INFORMATION. The Fund's investment objective may not be changed without
the approval of a majority of the Fund's outstanding voting securities. As
defined in the 1940 Act and as used in this Prospectus, a "majority of the
Fund's outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations which also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval. The Fund's policies
regarding lending, and the percentage of Fund 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.
Prospectus Page 11
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 1,000 employees; (b) any
account with assets of at least $25,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $25,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies comprising or affiliated with Liechtenstein
Global Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
Orders received by GT Global before the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on any
Business Day will be executed at the public offering price for the applicable
class of shares determined that day. A "Business Day" is any day Monday through
Friday on which the NYSE is open for business. All purchase orders will be
executed at the public offering price next determined after the purchase order
is received. The Fund and GT 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 GT Global concerning their eligibility to purchase Advisor Class
shares. For specific information on opening an account, please contact your
Financial Advisor or GT Global.
PURCHASE BY BANK WIRE. Shares of the Fund may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. Accordingly, a bank wire
received by the close of regular trading on the NYSE on a Business Day will be
effected that day. A wire investment is considered received when the Transfer
Agent is notified that the bank wire has been credited to the Fund. Prior
telephonic or facsimile notice that a bank wire is being sent must be provided
to the Transfer Agent. A bank may charge a service fee for wiring money to the
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 Fund's shares will not be issued unless a written request is
submitted to the Transfer Agent. Shares of the Fund are recorded on a register
by the Transfer Agent, and shareholders who do not elect to receive certificates
have the same rights of ownership as if certificates had been issued to them.
Redemptions and exchanges by shareholders who hold certificates may take longer
to effect than similar transactions involving non-certificated shares because
the physical delivery and processing of properly executed certificates is
required. ACCORDINGLY, THE FUND AND GT GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT
REQUEST ISSUANCE OF CERTIFICATES.
Prospectus Page 12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of the Fund may only be exchanged for Advisor Class shares
of the other GT 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 GT Global Mutual Fund
Shares to be acquired may be legally made. EXCHANGES ARE NOT TAX-FREE AND MAY
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." In
addition to the Fund, the GT Global Mutual Funds currently include:
-- GT GLOBAL AMERICA GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
- ----------------
* Formerly G.T. Latin America Growth Fund
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, GT Global and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectuses of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus.
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 Fund's or GT 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 13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. All redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request and any required supporting
documentation. Redemption requests received before the close of regular trading
on the NYSE on any Business Day will be effected at the net asset value
calculated on that day. Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institutions.
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 change 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 Fund, GT 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 Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
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 14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or in writing 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 Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until it has assured itself that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For more information on how to redeem Fund shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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
Acounts make such orders through their Financial Advisor. INVESTORS SHOULD
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. See "How to Invest;"
"How to Make Exchanges;" "How to Redeem Shares"; and "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" for more information.
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
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 INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO GT
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: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call GT 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 GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the instructions
but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by determining the value of its
total assets (the securities it holds plus any cash or other assets, including
the interest accrued but not yet received), subtracting all of its liabilities
(including accrued expenses), and dividing the result by the total number of
shares outstanding at such time. Net asset value is determined separately for
each class of the Fund.
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued, or, lacking any
sales, at the last available bid price. Long-term 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 LGT Asset Management 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 the
Fund are readily available, those positions are valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
The Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or over-the-counter dealer markets which trade on days when
the NYSE is closed (such as a Saturday). As a result, the net asset values of
the Fund may be significantly affected by such trading on days when shareholders
cannot purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund pays quarterly dividends from its
net investment income, if any, which includes dividends, accrued interest and
earned discount (including both original issue and market discounts) less
applicable expenses. The Fund also annually distributes substantially all of its
realized net short-term capital gains (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. The 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 the 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 will be higher than the per share
income dividends on other classes of the Fund's shares as a result of the
service and distribution fees applicable to those other shares. SHAREHOLDERS MAY
ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the Fund (or other GT Global Mutual
Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional
Prospectus Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Advisor Class shares of the Fund (or other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE REINVESTED
AUTOMATICALLY IN ADDITIONAL ADVISOR CLASS SHARES OF THE FUND. Reinvestments in
another GT Global Mutual Fund may only be directed to an account with the
identical shareholder registration and account number. These elections may be
changed by a shareholder at any time; to be effective with respect to a
distribution, the shareholder or the shareholder's broker must contact the
Transfer Agent by mail or telephone at least 15 Business Days prior to the
payment date. THE FEDERAL INCOME TAX 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 the 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. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that the Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transaction and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from the 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 the Fund's net capital gain when designated as such, are taxable to its
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
The 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 the
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund generally will have
similar tax consequences. In addition, if Fund shares are purchased within 90
days before or after redeeming other Fund shares (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 Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Fund. Pursuant to such responsibility, the Board has approved contracts with
various financial organizations to provide, among other things, day to day
management services required by the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as the Fund's investment manager and administrator include, but are
not limited to, determining the composition of the Fund's portfolio and placing
orders to buy, sell or hold particular securities; furnishing corporate officers
and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays LGT Asset Management investment management and administration
fees, computed daily and paid monthly, based on the 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. This
rate is higher than that paid by most mutual funds. LGT Asset Management has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 1.50% of the
average daily net assets of the Fund's Advisor Class shares.
LGT Asset Management also serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion, and allocating the
result according to each Fund's average daily net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consist of
GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
Prospectus Page 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------ ------------------------------------ ------------------------------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager since Fund Portfolio Manager for LGT Asset Management since 1991; prior
London inception in 1991 thereto, Portfolio Manager for LGT Asset Management PLC
(London).
Paul Griffiths Portfolio Manager since 1995 Portfolio Manager for LGT Asset Management PLC (London) and
London LGT Asset Management since 1994; from 1993 to 1994, Global
Bond Fund Manager, Lazard Investors; from 1991 to 1993,
Global Bond Fund Manager, Sanwa International PLC; from
1989 to 1991, Account Officer, Royal Bank of Canada.
</TABLE>
In placing securities orders for the Fund's portfolio transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker-dealer. Commissions or
discounts in foreign securities exchanges or OTC markets often are fixed and
generally are higher than those in U.S. securities exchanges or markets. 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, forward currency and options transactions. Consistent with its
obligation to obtain the best net results, LGT Asset Management may consider a
broker/dealer's sale of shares of the GT Global Mutual Funds as a factor in
considering through whom portfolio transactions will be effected. Brokerage
transactions may be executed through any Liechtenstein Global Trust affiliate.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of the Fund's Advisor Class shares. GT Global is a subsidiary of
Liechtenstein Global Trust with offices at 50 California Street, 27th Floor, San
Francisco, California 94111.
LGT Asset Management or an affiliate thereof may make ongoing payments to
Financial Advisors and others that facilitate the administration and servicing
of Advisor Class shareholder accounts.
GT Global, at its own expense, may also provide promotional incentives to
brokers that sell shares of the Fund and/or shares of the other GT Global Mutual
Funds. In some instances compensation or promotional incentives may be offered
to brokers that have sold or may sell significant amounts of shares during
specified periods of time. Such compensation and incentives may include, but are
not limited to, cash, merchandise, trips and financial assistance to brokers in
connection with preapproved conferences or seminars, sales or training programs
for invited sales personnel, payment for travel expenses (including meals and
lodging) incurred by sales personnel and members of their families or other
invited guests to various locations for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding one or more
of the GT Global Mutual Funds, and/or other events sponsored by the broker.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks may also
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. 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 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, such as an additional investment, a
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to the Fund's
automatic dividend reinvestment program may be provided quarterly. Shortly after
the end of the 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 the Fund and include the
Fund's financial statements. Under certain circumstances, duplicate mailings of
such reports to the same household may be consolidated. In addition, the federal
income tax status of distributions made by the Fund to shareholders are reported
after the end of each calendar year on Form 1099-DIV.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
establish other funds, each corresponding to a distinct investment portfolio and
a distinct series of the Company's common stock. Shares of the 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 the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of the Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Company would be required to hold a
shareholders' meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
Advisor Class shares are offered through this prospectus to certain 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 new 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
0.35% of the average daily net assets of that class. For the fiscal year ended
October 31, 1995, total operating expenses for the Class A shares were 1.74% of
average net assets for the Fund.
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, 1995,
total operating expenses for the Class B shares were 2.39% of average net assets
for the Fund.
Prospectus Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME 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 Advisor
Class shares of the Fund generally will be higher than that of the Class A and B
shares of the Fund because of the higher expenses borne by the Class A and B
shares. The per share dividends on Advisor Class shares of the Fund will
generally be higher than the per share dividends on Class A and B shares of the
Fund as a result of the service and distribution fees applicable with respect to
Class A and B shares. Consequently, during comparable periods, the Fund expects
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 the
Fund; 100 million shares have been classified as Class A shares, 100 million
shares have been classified as Class B shares and 100 million shares have been
classified as Advisor Class shares for the Fund. This amount may be increased
from time to time in the discretion of the Board of Directors. Each share of the
Fund represents an interest in the Fund only, has a par value of $0.0001 per
share, represents an equal proportionate interest in the Fund with other shares
of the Fund and is entitled to such dividends and other distributions out of the
income earned and gain realized on the assets belonging to the Fund as may be
declared at the discretion of the Board of Directors. Each Class A, Class B and
Advisor Class share of the Fund is equal as to earnings, assets and voting
privileges, except as noted above, and each class bears the expenses, if any,
related to the distribution of its shares. Shares of the Fund when issued are
fully paid and nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll free at (800) 223-2138 or by writing to the Fund at P.O. Box 7893, San
Francisco, California 94120-7893.
PERFORMANCE INFORMATION. The Fund, from time to time, may include information on
its investment results and/or comparisons of its investment results to various
unmanaged indices or results of other mutual funds or groups of mutual funds in
advertisements, sales literature or reports furnished to present or prospective
shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/ or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date as established by the
Board of Directors.
In addition, in order to more completely represent the Fund's performance or
more accurately compare such performance to other measures of investment return,
the Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized return reflects percentage rates of return encompassing all
elements of total return (e.g., income and capital appreciation or
depreciation); it 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 Fund's performance data reflects past performance and is not necessarily
indicative of future results. The Fund's investment results will vary from time
to time depending upon market conditions, the composition of its portfolio and
its operating expenses. These factors and possible differences in calculation
methods should be considered when comparing the Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. The Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
The Fund's annual report contains additional information with respect to its
performance. The
Prospectus Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
annual report is available to investors upon request and free of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global and a
subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 North California Boulevard, Suite 450, Walnut Creek,
California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of the Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset Management, GT
Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and the Fund's 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 Fund, assists in
the preparation of the Fund's federal and state income tax returns and consults
with the Company and the Fund as to matters of accounting, regulatory filings,
and federal and state income taxation.
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 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 26
<PAGE>
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ADVISOR CLASS
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
[LGT LOGO]
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for
Uniform Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under
which the custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $500 minimum initial investment for each Fund is required. Checks should be made payable to "GT GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 413 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
405 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 424 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
416 / / GT GLOBAL EMERGING MARKETS FUND $ 406 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
411 / / GT GLOBAL HEALTH CARE FUND $ 423 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
415 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 404 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / GT GLOBAL INFRASTRUCTURE FUND $ 410 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / GT GLOBAL FINANCIAL SERVICES FUND $ 409 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / GT GLOBAL NATURAL RESOURCES FUND $ 408 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / GT GLOBAL CONSUMER PRODUCTS $ 418 / / GT GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
402 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 401 / / GT GLOBAL DOLLAR FUND $
---------- ----------
403 / / GT GLOBAL EUROPE GROWTH FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND
I/WE AGREE TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS'
TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC
INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH LOSS OR
DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE INVESTOR(S)
CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS
AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL GT GLOBAL, INC., G.T.
GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS,
INC. OR THE FUNDS' TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR
REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME
CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE
GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name
- ------------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the GT Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
GT Global, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS GROWTH FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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., GT GLOBAL
GROWTH & INCOME FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
GROPV602006MC
<PAGE>
GT GLOBAL EMERGING MARKETS FUND: ADVISOR CLASS
GT GLOBAL LATIN AMERICA GROWTH FUND: ADVISOR CLASS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND ("EMERGING MARKETS FUND") seeks long-term growth
of capital by investing primarily in equity securities of companies in emerging
markets.
GT GLOBAL LATIN AMERICA GROWTH FUND ("LATIN AMERICA GROWTH FUND") seeks capital
appreciation by investing primarily in securities of a broad range of Latin
American issuers, including common stock and other equity securities, as well as
debt securities. Each Fund is hereinafter referred to individually as a "Fund"
and together as the "Funds."
The Emerging Markets Fund and Latin America Growth Fund are mutual funds managed
by LGT Asset Management, Inc. ("LGT Asset Management"). LGT Asset Management and
its worldwide affiliates are part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services to individual
and institutional investors. LGT Asset Management attempts to identify countries
and industries where economic and political factors, including currency
movements, are likely to produce above average growth rates, and to identify
companies within such countries and industries that are best positioned to
benefit from these factors. There can be no assurance that the Funds will
achieve their investment objectives.
The Funds may invest significantly in lower quality and unrated foreign
government bonds whose credit quality is generally considered the equivalent of
U.S. corporate debt securities commonly known as "junk bonds." Investments of
this type are subject to a greater risk of loss of principal and interest.
Purchasers should carefully assess the risks associated with an investment in
either Fund.
THE FUNDS ARE INVESTMENT COMPANIES DESIGNED FOR LONG TERM INVESTORS AND NOT AS
TRADING VEHICLES. THE FUNDS DO NOT REPRESENT A COMPLETE INVESTMENT PROGRAM NOR
ARE THE FUNDS SUITABLE FOR ALL INVESTORS. AN INVESTMENT IN EITHER FUND SHOULD BE
CONSIDERED SPECULATIVE AND SUBJECT TO SPECIAL RISK FACTORS, RELATED PRIMARILY TO
THE FUNDS' INVESTMENTS IN EMERGING MARKETS AND LATIN AMERICA, RESPECTIVELY,
WHICH FACTORS SHOULD BE REVIEWED CAREFULLY BY POTENTIAL INVESTORS.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information for each Fund dated February 29, 1996, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Statement of Additional Information, which may be
amended or supplemented from time to time, is available without charge by
writing to the Funds at 50 California Street, 27th Floor, San Francisco,
California 94111, or calling (800) 824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
An investment in one or both of the Funds offers the following advantages:
/ / Access to Securities Markets Around the World
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Automatic Dividend and Other Distribution Reinvestment
/ / Exchange Privileges with the Advisor Class of the Other GT Global Mutual
Funds
FOR FURTHER INFORMATION CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION 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>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 8
Investment Objectives and Policies........................................................ 10
Risk Factors.............................................................................. 17
How to Invest............................................................................. 23
How to Make Exchanges..................................................................... 24
How to Redeem Shares...................................................................... 25
Shareholder Account Manual................................................................ 27
Calculation of Net Asset Value............................................................ 28
Dividends, Other Distributions and Federal Income Taxation................................ 28
Management................................................................................ 30
Other Information......................................................................... 33
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
Investment Objectives: The Emerging Markets Fund seeks long-term growth of capital
The Latin America Growth Fund seeks capital appreciation
Principal Investments: The Emerging Markets Fund normally invests at least 65% of its
total assets in equity securities of companies in emerging markets
The Latin America Growth Fund normally invests at least 65% of its
total assets in equity and debt securities issued by Latin
American companies and governments
Investment Manager: LGT Asset Management is part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
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
Advisor Class Shares: least 1,000 employees; (b) any account with assets of at least
$25,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $25,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies comprising or affiliated with Liechtenstein Global
Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust
Exchange Privileges: Advisor Class shares of either Fund may be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by LGT
Asset Management
Dividends and Other
Distributions: Dividends paid annually from available net investment income and
realized net short-term capital gains; other distributions paid
annually from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the distributing Fund or of other GT
Global Mutual Funds
Net Asset Value: Advisor Class shares of each Fund are expected to be quoted daily
in the financial section of most newspapers
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comprising Liechtenstein Global Trust are indirect subsidiaries of the Prince of
Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVES AND POLICIES. The Emerging Markets Fund is a diversified
mutual fund and the Latin America Growth Fund is a non-diversified mutual fund,
both organized as series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end investment management company.
The Emerging Markets Fund's investment objective is long-term growth of capital.
It normally invests at least 65% of its total assets in equity securities of
companies in emerging markets. The Emerging Markets Fund considers emerging
markets to include all the world's countries except the United States, Canada,
Japan, Australia, New Zealand and most countries in Western Europe.
The Emerging Markets Fund may invest up to 35% of its total assets in a
combination of: (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not specifically listed in this Prospectus where investing may become
feasible and desirable subsequent to the date of this Prospectus; and (iv) cash
and money market instruments.
The Emerging Markets Fund may invest up to 20% of its total assets in below
investment grade debt securities.
See "Investment Objectives and Policies" for a more complete discussion of the
Emerging Markets Fund's investment policies.
The Latin America Growth Fund's investment objective is capital appreciation.
The Latin America Growth Fund normally invests at least 65% of its total assets
in securities of a broad range of Latin American issuers. However, the Latin
America Growth Fund reserves the right to be primarily invested in securities of
U.S. issuers for temporary defensive purposes or pending investment of the
proceeds of new sales of Fund shares. Under normal circumstances, the Latin
America Growth Fund may invest up to 35% of its total assets in a combination of
equity and debt securities of U.S. issuers. The portion of the Latin America
Growth Fund's assets not invested in equity securities may be invested in
corporate and government debt securities and in money market securities.
Although investment opportunities in certain Latin American countries currently
may be limited, LGT Asset Management believes that the potential for investment
opportunities and capital appreciation in such countries is likely to be
substantial. Though the Latin America Growth Fund may invest throughout Latin
America, the Latin America Growth Fund intends to focus its investments in
Mexico, Chile, Brazil and Argentina, which have the most developed capital
markets in Latin America. From time to time, a significant portion of the Latin
America Growth Fund's assets may be invested in any one of them.
The Latin America Growth Fund normally may invest up to 50% of its total assets
in external debt obligations issued or guaranteed by Latin American governments
or governmental entities. External debt obligations are those in which a foreign
entity or individual extends credit to a Latin American borrower. In addition,
the Latin America Growth Fund may hold and trade certain debt securities issued
by Latin American governments ("Sovereign Debt"), including those that are or
may become eligible for conversion into investments in Latin American
enterprises under debt conversion programs sponsored by various Latin American
countries, or may convert such debt into equity or other investments under debt
conversion programs. See "Investment Objectives and Policies" and "Risk
Factors."
INVESTMENT TECHNIQUES AND RISK FACTORS. The Emerging Markets Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its
portfolio positions, expressed in U.S. dollars. Investments in foreign
securities involve risks
Prospectus Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
relating to political and economic developments abroad and the differences
between the regulations to which U.S. and foreign issuers are subject. Changes
in foreign currency exchange rates affect the Emerging Markets Fund's net asset
value, earnings and gains and losses realized on sales of securities. Securities
of foreign companies may be less liquid and their prices more volatile than
those of securities of comparable U.S. companies. Because of the special risks
associated with investing in emerging markets, an investment in the Emerging
Markets Fund should be considered speculative. There is no assurance that the
Emerging Markets Fund will achieve its investment objective. See "Risk Factors."
The Latin America Growth Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions and in the rate of
exchange between the currencies in which its positions are traded and the U.S.
dollar. Because of the Latin America Growth Fund's policy of investing primarily
in securities of foreign issuers, and specifically of Latin American issuers, an
investment in the Latin America Growth Fund requires consideration of certain
factors that are not typically associated with investing in securities of most
U.S. issuers. Risk factors associated with investment in the Latin America
Growth Fund include: (1) political and economic risks; (2) religious and ethnic
instability; (3) custodial, pricing and settlement issues; (4) non-uniform
accounting, auditing and corporate disclosure standards and governmental
regulation which may lead to less publicly available and less reliable
information concerning Latin American issuers than is typically the case with
respect to U.S. issuers; (5) less regulation of Latin American securities
markets generally than is the case in the United States; (6) currency
fluctuations; (7) the risk of currency devaluation; (8) high levels of
inflation; (9) smaller, less developed, less liquid and more volatile markets
than the major U.S. securities markets; and (10) the imposition of foreign
withholding taxes on the investment income and trading profits of the Latin
America Growth Fund.
Trading in Sovereign Debt involves a high degree of risk. The issuer of the debt
or the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal and/or interest when due in accordance
with the terms of such debt. Sovereign Debt may be regarded as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations and involves major
risk exposure to adverse conditions.
The Latin America Growth Fund normally invests in a substantial number of
issuers; however, the Fund's classification as a non-diversified investment
company under the Investment Company Act of 1940, as amended ("1940 Act") means
that the Latin America Growth Fund may invest a larger percentage of its assets
in individual issuers than a diversified investment company. As a result, its
exposure to credit and market risks associated with each such issuer is
increased. There is no assurance that the Latin America Growth Fund will achieve
its investment objective. See "Risk Factors."
PURCHASES AND REDEMPTIONS. Advisor class shares of common stock of the Funds are
available through Financial Advisors (as defined herein) that have entered into
agreements with the Funds' distributor, GT Global, Inc. ("GT Global") or certain
of its affiliates. See "How to Invest" and "Shareholder Account Manual." Shares
may be redeemed through the Funds' transfer agent, GT Global Investor Services,
Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Prospectus Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Emerging Markets Fund are
reflected in the following tables*:
<TABLE>
<CAPTION>
ADVISOR
CLASS
-----------
<S> <C>
SHAREHOLDER TRANSACTION COSTS
Maximum sales charge on purchases (as a % of offering price)................................................ None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum contingent deferred sales charge.................................................................... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year...................................................................... None
-- On each additional exchange............................................................................ $ 7.50
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.98%
12b-1 service and distribution fees......................................................................... None
Other expenses.............................................................................................. 0.67%
-----
Total Fund Operating Expenses............................................................................... 1.65%
-----
-----
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor directly or indirectly would have paid the following expenses at the
end of the periods shown on a $1,000 investment, assuming a 5% annual return*:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares........................................ $16 $ 52 $111 $206
</TABLE>
- --------------
* BECAUSE ADVISOR CLASS SHARES WERE NOT OFFERED PRIOR TO JUNE 1, 1995,
EXPENSES ARE ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES.
SUCH DATA ARE DERIVED FROM CLASS A AND CLASS B SHARE EXPENSES FOR THE FUND'S
FISCAL YEAR ENDED OCTOBER 31, 1995. THESE TABLES ARE INTENDED TO ASSIST
INVESTORS IN UNDERSTANDING THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH
INVESTING IN THE FUND. "Other expenses" include custody, transfer agent,
legal, audit and other expenses. See "Management" herein and the Statement
of Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust invests
in Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT
A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above table and the assumption in the
Hypothetical Example of a 5% annual return are required by regulation of the
Securities and Exchange Commission applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's
projected or actual performance.
Prospectus Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Latin America Growth Fund are
reflected in the following tables*:
<TABLE>
<CAPTION>
ADVISOR
CLASS
-----------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (% of offering price)........................................... None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum contingent deferred sales charges................................................................... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year.................................................................... None
-- On each additional exchange.......................................................................... $ 7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.98%
12b-1 distribution and service fees......................................................................... None
Other expenses.............................................................................................. 0.65%
-----------
Total Fund Operating Expenses................................................................................. 1.63%
-----------
-----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return*:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $15 $ 51 $110 $204
</TABLE>
- ------------------
* BECAUSE ADVISOR CLASS SHARES WERE NOT OFFERED PRIOR TO JUNE 1, 1995,
EXPENSES ARE ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES.
SUCH DATA ARE DERIVED FROM CLASS A AND CLASS B SHARE EXPENSES FOR THE FUND'S
FISCAL YEAR ENDED OCTOBER 31, 1995. THESE TABLES ARE INTENDED TO ASSIST
INVESTORS IN UNDERSTANDING THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH
INVESTING IN THE FUND. See "Management" herein and the Statement of
Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust invests
in Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT
A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above table and the assumption in the
Hypothetical Example of a 5% annual return are required by regulation of the
SEC applicable to all mutual funds. The 5% annual return is not a prediction
of and does not represent the Fund's projected or actual performance.
Prospectus Page 7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed information concerning income and capital
changes for one share of each class of shares of each Fund for the periods
shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes, for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon also is included in the Statement of Additional Information.
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------
MAY 18, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------- OPERATIONS) TO
1995(E) 1994 1993 OCTOBER 31, 1992
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period.... $ 18.81 $ 14.42 $ 11.10 $ 11.43
-------- -------- -------- --------
Income from investment operations:
Net investment income (loss)............ 0.13 (0.02) 0.02* 0.07*
Net realized and unrealized gain (loss)
on investments........................ (4.32) 4.68 3.38 (0.40)
-------- -------- -------- --------
Net increase (decrease) from investment
operations............................ (4.19) 4.66 3.40 (0.33)
-------- -------- -------- --------
Distributions:
Net investment income................. -- (0.01) (0.08) --
Net realized gain on investments...... (0.77) (0.26) -- --
-------- -------- -------- --------
Total distributions................. (0.77) (0.27) (0.08) --
-------- -------- -------- --------
Net asset value, end of period.......... $ 13.85 $ 18.81 $ 14.42 $ 11.10
-------- -------- -------- --------
-------- -------- -------- --------
Total investment return (c)............. (23.04)% 32.58% 30.90% (2.90)%(a)
-------- -------- -------- --------
-------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $252,457 $417,322 $187,808 $84,558
Ratio of net investment income (loss) to
average net assets.................... 0.89% (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net assets:
With expense reductions............... 2.12% 2.06% 2.4 (b) 2.4%*(b)
Without expense reductions............ 2.14% -- (d) -- (d) --%(d)
Portfolio turnover rate +++............. 114% 100% 99% 32%(b)
<CAPTION>
CLASS B++ ADVISOR
------------------------------- CLASS***
------------
YEAR ENDED OCTOBER APRIL 1, JUNE 1, 1995
31, 1993 TO TO
------------------ OCTOBER 31, OCTOBER 31,
1995(E) 1994 1993 1995
-------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period.... $ 18.68 $ 14.39 $ 11.47 $14.71
-------- -------- ----------- ------------
Income from investment operations:
Net investment income (loss)............ 0.06 (0.12) 0.00** 0.08
Net realized and unrealized gain (loss)
on investments........................ (4.29) 4.67 2.92 (0.91)
-------- -------- ----------- ------------
Net increase (decrease) from investment
operations............................ (4.23) 4.55 2.92 (0.83)
-------- -------- ----------- ------------
Distributions:
Net investment income................. -- -- -- --
Net realized gain on investments...... (0.77) (0.26) -- --
-------- -------- ----------- ------------
Total distributions................. (0.77) (0.26) -- --
-------- -------- ----------- ------------
Net asset value, end of period.......... $ 13.68 $ 18.68 $ 14.39 $13.88
-------- -------- ----------- ------------
-------- -------- ----------- ------------
Total investment return (c)............. (23.37)% 31.77% 25.50%(a) (5.71)%(a)
-------- -------- ----------- ------------
-------- -------- ----------- ------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $225,861 $291,289 $32,218 $1,675
Ratio of net investment income (loss) to
average net assets.................... 0.39% (0.61)% (0.4)% *(b) 1.39%(b)
Ratio of expenses to average net assets:
With expense reductions............... 2.62% 2.56% 2.9%**(b) 1.62%(b)
Without expense reductions............ 2.64% -- (d) --%(d) 1.64%(b)
Portfolio turnover rate +++............. 114% 100% 99% 114%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund operating expenses of
$0.02 for the year ended October 31, 1993 and for the period from May 18,
1992 (commencement of operations) to October 31, 1992, respectively. Without
such reimbursements, the expense ratios would have been 2.61% and 2.91% and
the ratio of net investment income to average net assets would have been
0.36% and 1.21% for the year ended October 31, 1993 and for the period from
May 18, 1992 (commencement of operations) to October 31, 1992, respectively.
** Includes reimbursement by LGT Asset Management of Fund operating expenses of
$0.02. Without such reimbursements, the expense ratio would have been 3.63%
and the ratio of net investment income to average net assets would have been
(0.76)%.
*** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(e) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
Prospectus Page 8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------
AUGUST 13, 1991
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1995(A) 1994(A) 1993(A) 1992 OCTOBER 31, 1991
-------- -------- -------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $26.11 $19.78 $15.59 $16.45 $14.29
-------- -------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss)............ 0.15 (0.08) 0.18 0.25 0.01
Net realized and unrealized gain (loss)
on investments........................ (9.28) 6.75 5.21 (0.98) 2.15
-------- -------- -------- ------- ----------------
Net increase (decrease) from investment
operations............................ (9.13) 6.67 5.39 (0.73) 2.16
-------- -------- -------- ------- ----------------
Distributions:
Net investment income................. 0.00 (0.19) (0.12) (0.13) 0.00
Net realized gain on investments...... (1.60) (0.15) (1.08) (0.00) 0.00
-------- -------- -------- ------- ----------------
Total distributions................. (1.60) (0.34) (1.20) (0.13) 0.00
-------- -------- -------- ------- ----------------
Net asset value, end of period.......... $15.38 $26.11 $19.78 $15.59 $16.45
-------- -------- -------- ------- ----------------
-------- -------- -------- ------- ----------------
Total investment return (d)............. (37.16)% 34.10% 37.10% (4.50)% 15.10%(b)
-------- -------- -------- ------- ----------------
-------- -------- -------- ------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $182,462 $336,960 $129,280 $94,085 $125,038
Ratio of net investment income (loss) to
average net assets.................... 0.86% (0.29)% 1.30%* 1.30%* 1.20%*(c)
Ratio of expenses to average net assets:
With expense reductions............... 2.11% 2.04% 2.40%* 2.40%* 2.40%*(c)
Without expense reductions............ 2.12% -- (e) -- (e) -- (e) --%(e)
Portfolio turnover rate +++............. 125% 155% 112% 159% none
<CAPTION>
CLASS B++ ADVISOR
------------------------------- CLASS**
------------
YEAR ENDED OCTOBER APRIL 1, JUNE 1, 1995
31, 1993 TO TO
------------------ OCTOBER 31, OCTOBER 31,
1995(A) 1994(A) 1993(A) 1995
-------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $25.94 $19.75 $16.26 $15.95
-------- -------- ----------- ------
Income from investment operations:
Net investment income (loss)............ 0.06 (0.22) (0.07) 0.09
Net realized and unrealized gain (loss)
on investments........................ (9.19) 6.74 3.56 (0.64)
-------- -------- ----------- ------
Net increase (decrease) from investment
operations............................ (9.13) 6.52 3.49 (0.55)
-------- -------- ----------- ------
Distributions:
Net investment income................. 0.00 (0.18) 0.00 0.00
Net realized gain on investments...... (1.60) (0.15) 0.00 0.00
-------- -------- ----------- ------
Total distributions................. (1.60) (0.33) 0.00 0.00
-------- -------- ----------- ------
Net asset value, end of period.......... $15.21 $25.94 $19.75 $15.40
-------- -------- ----------- ------
-------- -------- ----------- ------
Total investment return (d)............. (37.42)% 33.33% 21.50%(b) (3.45)%(b)
-------- -------- ----------- ------
-------- -------- ----------- ------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $134,527 $211,673 $13,576 $ 369
Ratio of net investment income (loss) to
average net assets.................... 0.36% (0.79)% (0.70)%(c) 1.36%(c)
Ratio of expenses to average net assets:
With expense reductions............... 2.61% 2.54% 2.90%(c) 1.61%(c)
Without expense reductions............ 2.62% -- (e) --%(e) 1.62%(c)
Portfolio turnover rate +++............. 125% 155% 112% 125%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund operating expenses of
$0.02, $0.04 and $0.01 for the years ended October 31, 1993 and 1992 and for
the period from August 13, 1991 to October 31, 1991, respectively. Without
such reimbursements, the expense ratios would have been 2.49%, 2.62% and
3.42% and the ratios of net investment income to average net assets would
have been 1.25%, 1.07% and 0.l5% for the years ended October 31, 1993 and
1992 and for the period from August 31, 1991 to October 31, 1991,
respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, rights and warrants to acquire such securities and substantially
similar forms of equity with comparable risk characteristics. These securities
may be listed on securities exchanges, traded in various over-the-counter
("OTC") markets, or have no organized market.
For purposes of the Emerging Markets Fund's operations, "emerging markets" will
consist of all countries determined by LGT Asset Management to have developing
or emerging economies and markets. These countries generally include every
country in the world except the United States, Canada, Japan, Australia, New
Zealand and most countries located in Western Europe. See "Investment Objective
and Policies" in the Statement of Additional Information for a complete list of
all the countries which the Emerging Markets Fund does not consider to be
emerging markets.
The Emerging Markets Fund will focus its investments in those emerging markets
which LGT Asset Management believes have strongly developing economies and in
which the markets are becoming more sophisticated. For purposes of the Emerging
Markets Fund's policy of normally investing at least 65% of its total assets in
equity securities of issuers in emerging markets, the Emerging Markets Fund will
consider investment in the following emerging markets:
<TABLE>
<S> <C>
Argentina Mauritius
Bolivia Mexico
Botswana Morocco
Brazil Nigeria
Chile Pakistan
China Peru
Colombia Philippines
Cyprus Poland
Czech Republic Portugal
Ecuador Singapore
Egypt Republic of Slovakia
Ghana South Africa
Greece South Korea
Hong Kong Sri Lanka
Hungary Swaziland
India Taiwan
Indonesia Thailand
Israel Turkey
Jamaica Uruguay
Jordan Venezuela
Kenya Zimbabwe
Malaysia
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment, the Emerging Markets Fund will not be invested in all
such markets at all times. Moreover, investing in some of those markets
currently may not be desirable or feasible, due to the lack of adequate custody
arrangements for the Emerging Markets Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenues from business in emerging markets, provided that, in LGT
Asset Management's view, the value of such issuer's securities will tend to
reflect emerging market development to a greater extent than developments
elsewhere; or (iii) organized under the
Prospectus Page 10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
laws of, or with a principal office in, an emerging market.
In managing the Emerging Markets Fund, LGT Asset Management seeks to identify
those countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. LGT Asset
Management then seeks to invest in those companies in such countries and
industries that are best positioned and managed to take advantage of these
economic and political factors. The assets of the Emerging Markets Fund
ordinarily will be invested in the securities of issuers in at least three
different emerging markets. The Emerging Markets Fund may invest up to 15% of
its net assets in illiquid securities.
Under normal circumstances, the Emerging Markets Fund may invest up to 35% of
its total assets in a combination of (i) debt securities of government or
corporate issuers in emerging markets; (ii) equity and debt securities of
issuers in developed countries, including the United States; (iii) securities of
issuers in emerging markets not included in the list of emerging markets above,
if investing therein becomes feasible and desirable subsequent to the date of
this Prospectus; and (iv) cash and money market instruments. In evaluating
investments in securities of issuers in developed markets, LGT Asset Management
will consider, among other things, the business activities of the issuer in
emerging markets and the impact that developments in emerging markets are likely
to have on the issuer.
The Emerging Markets Fund may also use instruments (including forward contracts)
often referred to as "derivatives." See "Options, Futures and Forward Currency
Transactions."
INVESTMENTS IN DEBT SECURITIES. The Emerging Markets Fund may invest in debt
securities of both governmental and corporate issuers in emerging markets.
Emerging market debt securities often are rated below investment grade.
"Investment grade" debt securities are those rated within the four highest
ratings categories by Standard & Poor's Ratings Services ("S&P") or Moody's
Investors Service ("Moody's") or, if not rated, determined by LGT Asset
Management to be of comparable quality. Securities rated Baa by Moody's are
investment grade debt securities but are considered to have speculative
characteristics. Many emerging market debt securities are not rated by U.S.
ratings agencies. The Emerging Markets Fund will not invest more than 20% of its
total assets in debt securities rated below investment grade. Investment in
non-investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." See "Risk Factors -- Risks Associated
with Debt Securities" for a more complete discussion.
If the rating of any of the Emerging Markets Fund's investments drops below a
minimum rating considered acceptable by LGT Asset Management for investment by
the Emerging Markets Fund, the Fund will dispose of any such security as soon as
practicable and consistent with the best interests of the Emerging Markets Fund
and its shareholders.
Capital appreciation in debt securities in which the Emerging Markets Fund
invests may arise as a result of favorable changes in relative foreign exchange
rates, in relative interest rate levels and/or in the creditworthiness of
issuers. The receipt of income from debt securities owned by the Emerging
Markets Fund is incidental to the Emerging Markets Fund's objective of long-term
growth of capital.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Emerging Markets Fund
may be able to invest in certain emerging markets solely or primarily through
governmentally authorized investment vehicles or companies. Pursuant to the 1940
Act, the Emerging Markets Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company, as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the 1940 Act and market availability. The
Emerging Markets Fund does not intend to invest in such investment companies
unless, in the judgment of LGT Asset Management, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in an investment company, the Emerging Markets Fund would bear its
ratable share of that investment company's expenses, including its advisory and
administration fees. At the same
Prospectus Page 11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
time the Emerging Markets Fund would continue to pay its own management fees and
other expenses.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, LGT Asset Management may employ a temporary defensive investment
strategy if it determines such a strategy to be warranted due to market,
economic, or political conditions. Pursuant to such a defensive strategy, the
Emerging Markets Fund temporarily may invest up to 100% of its assets in cash
(U.S. dollars, foreign currencies, multinational currency units) and/or high
quality debt securities or money market instruments of U.S. or foreign issuers,
and most or all of the Emerging Markets Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Emerging
Markets Fund employs a temporary defensive strategy, it will not be invested so
as to achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of Emerging Markets
Fund shares or to meet ordinary daily cash needs, the Emerging Markets Fund
temporarily may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest any portion of its assets in money market
instruments.
The Emerging Markets Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Fund may not
invest more than 25% of its total assets in bank securities; (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.
The Emerging Markets Fund may invest in commercial paper rated as low as A-3 by
S&P or P-3 by Moody's or, if not rated, determined by LGT Asset Management to be
of comparable quality. Obligations rated A-3 and P-3 are considered by S&P and
Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
BORROWING. It is a fundamental policy of the Emerging Markets Fund that it may
borrow an amount up to 33 1/3% of its total assets in order to meet redemption
requests. Borrowing may cause greater fluctuation in the value of Emerging
Markets Fund shares than would be the case if the Emerging Markets Fund did not
borrow, but also may enable the Emerging Markets Fund to retain favorable
securities positions rather than liquidating such positions to meet redemptions.
The Emerging Markets Fund will not borrow to leverage its portfolio. It is a
nonfundamental policy of the Emerging Markets Fund that it will not purchase
securities during times when outstanding borrowings represent 5% or more of its
total assets.
LATIN AMERICA GROWTH FUND
The Latin America Growth Fund's investment objective is capital appreciation.
The Latin America Growth Fund normally invests at least 65% of its total assets
in the securities of a broad range of Latin American issuers. Though the Latin
America Growth Fund may invest throughout Latin America, under current market
conditions the Latin America Growth Fund expects to invest primarily in equity
and debt securities issued by companies and governments in Mexico, Chile, Brazil
and Argentina.
Consistent with its investment objective and policies, the Latin America Growth
Fund may invest in common stock, preferred stock, rights, warrants and
securities convertible into common stock, and other substantially similar forms
of equity securities with comparable risk characteristics, as well as bonds,
notes, debentures or other forms of indebtedness that may be developed in the
future. These securities may be listed on securities exchanges, traded in
various OTC markets or have no organized market.
The Latin America Growth Fund will purchase equity and debt securities in
seeking its objective of capital appreciation. Capital appreciation in debt
securities may arise as a result of a favorable change in relative foreign
exchange rates, in relative interest rate levels, or in the creditworthiness of
issuers. The receipt of income from such debt securities is incidental to the
Latin America Growth Fund's objective of capital appreciation.
Prospectus Page 12
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
The Latin America Growth Fund defines securities of Latin American issuers to
include the following: (a) securities of companies organized under the laws of,
or having a principal office located in, a Latin American country; (b)
securities of companies that derive 50% or more of their total revenues from
business in Latin America, provided that, in LGT Asset Management view, the
value of such issuers' securities reflect Latin American developments to a
greater extent than developments elsewhere; (c) securities issued or guaranteed
by the government of a country in Latin America, its agencies or
instrumentalities, or municipalities, or the central bank of such country; (d)
U.S. dollar-denominated securities or securities denominated in a Latin American
currency issued by companies to finance operations in Latin America; and (e)
securities of Latin American issuers, as defined herein, in the form of
depositary shares. For purposes of the foregoing definition, the Latin America
Growth Fund's purchases of securities issued by companies outside of Latin
America to finance their Latin American operations will be limited to securities
the performance of which is materially related to such company's Latin American
activities. For purposes of this Prospectus, unless otherwise indicated, the
Latin America Growth Fund defines Latin America to include the following
countries: Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, French Guiana,
Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles,
Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and
Venezuela.
ALLOCATION OF THE LATIN AMERICA GROWTH FUND'S INVESTMENTS. The extent of the
Latin America Growth Fund's holdings in any Latin American country will vary
from time to time, based upon LGT Asset Management's judgment regarding where
investment opportunities lie. In allocating investments among the various Latin
American countries, LGT Asset Management looks principally at the stage of
industrialization, potential for productivity gains through economic
deregulation, the impact of financial liberalization and monetary conditions and
the political outlook in each country. The Latin America Growth Fund may invest
more than 25% of its total assets in any of these four countries but does not
expect to invest more than 60% of its total assets in any one country.
The portion of the Latin America Growth Fund's total assets invested directly in
Chile may be less than the portions invested in other Latin American countries,
particularly Mexico, because, at present, with limited exceptions, capital
invested directly in Chile normally cannot be repatriated for at least one year.
In addition, repatriation restrictions apply to investments made under the debt
conversion programs in some countries.
Normally, the Latin America Growth Fund will invest a majority of its assets in
equity securities. The percentage allocation between equity and debt will vary
from country to country. The following factors, among others, will influence the
proportion of the Latin America Growth Fund's assets to be invested in equity
versus debt: level and anticipated direction of interest rates; expected rates
of economic growth and corporate profits growth; changes in Latin American
government policy including regulation governing industry, trade, financial
markets, foreign and domestic investment; substance and likely development of
government finances; and the condition of the balance of payments and changes in
the terms of trade.
Under normal circumstances, the Latin America Growth Fund may invest up to 35%
of its total assets in a combination of equity and debt securities of U.S.
issuers. In evaluating investments in securities of U.S. issuers, LGT Asset
Management will consider, among other things, the issuer's Latin American
business activities and the impact that development in Latin America may have on
the issuer's operations and financial condition.
The Latin America Growth Fund may also use instruments (including forward
contracts) often referred to as "derivatives." See "Options, Futures and Forward
Currency Transactions."
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Growth Fund may be able to invest in such countries solely or primarily
through governmentally approved investment vehicles or companies. For example,
due to Chile's current investment restrictions, the Latin America Growth Fund
currently intends to limit most of its Chilean investments to indirect
investments through American Depositary Receipts ("ADRs") and established
Prospectus Page 13
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Chilean investment companies, the shares of which are not subject to
repatriation restrictions.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. There
is no limitation on the percentage of the Latin America Growth Fund's assets
which may be invested in debt securities which are rated BB or lower by S&P or
Ba or lower by Moody's or, if not rated, are deemed by LGT Asset Management to
be of comparable quality. These debt securities are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds." Most debt securities in
which the Latin America Growth Fund will invest are not rated; if rated, it is
expected that such ratings would be below investment grade. However, the Latin
America Growth Fund will not invest in debt securities that are in default in
payment as to principal or interest. See "Risk Factors -- Risks Associated with
Debt Securities."
During 1990, the Mexican external debt markets experienced significant changes
with the completion of the "Brady Plan" restructurings in those markets. The
restructurings provided for the exchange of loans and cash for newly issued
bonds ("Brady Bonds"). Brady Bonds fall into two categories: collateralized
Brady Bonds and bearer Brady Bonds. Both types of Brady Bonds are issued in
various currencies, primarily the U.S. dollar. Brady Bonds are actively traded
in the OTC secondary market for Latin American debt. U.S. dollar-denominated
collateralized bonds, which may be fixed par bonds or floating rate discount
bonds, are collateralized in full as to principal by U.S. Treasury Zero Coupon
bonds having the same maturity. At least one year of rolling interest payments
are collateralized by cash or other investments. Brady Bonds have been issued
by, among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Jordan, Mexico, Nigeria, Philippines, Poland, Uruguay,
Venezuela and are expected to be issued by Panama, Peru and other emerging
market countries. Approximately $139 billion in principal amount of Brady Bonds
are outstanding, the largest proportion having been issued by Brazil, Argentina
and Mexico. Brady Bonds issued by Brazil, Argentina and Mexico currently are
rated below investment grade.
INVESTMENT IN OTHER INVESTMENT COMPANIES
OR VEHICLES. Under the 1940 Act, the Latin America Growth Fund generally may
invest up to 10% of its total assets in shares of other investment companies and
up to 5% of its total assets in any one investment company, or acquire up to 3%
of the voting stock of any one investment company. Investment in other
investment companies or vehicles may be the most practical or only manner in
which the Latin America Growth Fund can participate in certain Latin American
securities markets. Such investment may involve the payment of substantial
premiums above the value of such issuers' portfolio securities, and is subject
to limitations under the 1940 Act and market availability. There can be no
assurance that vehicles for investing in certain Latin American countries will
be available for investment. The Latin America Growth Fund does not intend to
invest in such vehicles or funds unless, in the judgment of LGT Asset
Management, the potential benefits of such investment justify the payment of any
applicable premium or sales charge. As a shareholder in an investment company,
the Latin America Growth Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time the Latin America Growth Fund would continue to pay its own management fees
and other expenses.
TEMPORARY DEFENSIVE STRATEGIES. The Latin America Growth Fund may invest up to
100% of its assets in cash (U.S. dollars, foreign currencies, multinational
units) and/or high quality debt securities or money market instruments to
generate income to defray Latin America Growth Fund expenses, for temporary
defensive purposes and pending investment in accordance with the Latin America
Growth Fund's investment objective and policies. In addition, the Latin America
Growth Fund reserves the right to be primarily invested in U.S. securities for
temporary defensive purposes or pending investment of the proceeds of sales of
new shares of the Fund. The Latin America Growth Fund may assume a temporary
defensive position when, due to political, market or other factors broadly
affecting Latin American markets, LGT Asset Management determines that
opportunities for capital appreciation in those markets would be significantly
limited over an extended period, or that investing in those markets presents
undue risk of loss.
Prospectus Page 14
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
The Latin America Growth Fund may invest in the following types of money market
securities (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or in the currency of any Latin American
country, which consist of: (a) obligations issued or guaranteed by (i) the U.S.
government or the government of a Latin American country, their agencies or
instrumentalities, or municipalities; or (ii) international organizations
designed or supported by multiple foreign governmental entities to promote
economic reconstruction or development ("supranational entities"); (b) finance
company obligations, corporate commercial paper and other short-term commercial
obligations; (c) bank obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances), subject to the restriction
that the Latin America Growth Fund may not invest more than 25% of its total
assets in bank securities; (d) repurchase agreements with respect to the
foregoing; and (e) other substantially similar short-term debt securities with
comparable risk characteristics.
The Latin America Growth Fund may invest in commercial paper rated as low as A-3
by S&P or P-3 by Moody's. Such obligations are considered to have an acceptable
capacity for timely repayment. However, these securities may be more vulnerable
to adverse effects or changes in circumstances than obligations carrying higher
designations.
The banks whose obligations may be purchased by the Latin America Growth Fund
and the banks and broker/dealers with whom the Latin America Growth Fund may
enter into repurchase agreements include any member bank of the Federal Reserve
System, and any broker/dealer or any foreign bank whose creditworthiness has
been determined by LGT Asset Management, in accordance with guidelines approved
by the Company's Board of Directors, to be at least equal to that of issuers of
commercial paper that the Latin America Growth Fund may purchase, as described
above. LGT Asset Management will review and monitor the creditworthiness of such
institutions under the Board's general supervision. In this regard, LGT Asset
Management will consider, among other factors, the capitalization of the
institution, LGT Asset Management's prior dealings with the institution, any
rating of the institution's senior long term debt by independent rating agencies
and other factors LGT Asset Management deems appropriate.
ADDITIONAL INVESTMENT POLICIES OF EMERGING MARKETS FUND AND LATIN AMERICA GROWTH
FUND
SECURITIES LENDING. The Funds may lend their portfolio securities to
broker/dealers or to other institutional investors. At all times a loan is
outstanding, the Funds require the borrower to maintain with the Funds'
custodian collateral consisting of cash, U.S. government securities or other
liquid, high grade debt securities at least equal to the value of the borrowed
securities, plus any accrued interest. The Funds will receive any interest paid
on the loaned securities and a fee and/or a portion of the interest earned on
the collateral. Income received in connection with securities lending may be
used to offset a Fund's custody fees. The Funds limit their 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 delays in receiving
additional collateral or in recovery of the loaned securities and possible loss
of rights in the collateral should the borrower fail financially.
PRIVATIZATIONS. The governments in some emerging markets and Latin American
countries have been engaged in programs of selling part or all of their stakes
in government owned or controlled enterprises ("privatizations"). LGT Asset
Management believes that privatizations may offer opportunities for significant
capital appreciation, and intends to invest assets of the Funds in
privatizations in appropriate circumstances. In certain emerging markets and
Latin American countries, the ability of foreign entities such as the Funds to
participate in privatizations may be limited by local law and/or the terms on
which the Funds may be permitted to participate may be less advantageous than
those afforded local investors. There can be no assurance that Latin American
governments and governments in emerging markets will continue to sell companies
currently owned or controlled by them or that privatization programs will be
successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Funds 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
Prospectus Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
be sold prior to the settlement date, but the Funds will purchase or sell
when-issued securities 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 Funds. If the Funds dispose
of the right to acquire a when-issued security prior to its acquisition or
disposes of its right to deliver or receive against a forward commitment, it may
incur a gain or loss. At the time the Funds enter into a transaction on a
when-issued or forward commitment basis, a segregated account consisting of cash
or high grade liquid debt securities equal to the value of the when-issued or
forward commitment securities will be established and maintained with that
Fund's custodian bank and will be marked to market daily. There is a risk that
the securities may not be delivered and that the Funds may incur a loss. The
Funds also may enter into reverse repurchase agreements, although (i) the
Emerging Markets Fund currently does not intend to do so and (ii) the Latin
America Growth Fund may not enter into such agreements with respect to more than
5% of its total assets.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. In seeking to protect
against the effect of adverse changes in the financial markets in which the
Funds invest, or against currency exchange rate or interest rate changes that
are adverse to the present or prospective positions of the Funds, both Funds may
use forward currency contracts, options on securities, options on indices,
options on currencies, and futures contracts and options on futures contracts on
U.S. and foreign government securities and currencies. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). Each
Fund may enter into such instruments up to the full value of its portfolio
assets. There can be no assurance that a Fund's risk management policies will
succeed. These techniques are described below and are further detailed in the
Statement of Additional information.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets and most Latin
American markets, to securities denominated in such currencies or to securities
of issuers domiciled or principally engaged in business in such emerging
markets. To the extent that such a market does not exist, LGT Asset Management
may not be able to effectively hedge its investment in such Latin American and
emerging markets.
In addition, each Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that LGT Asset Management intends to include in the Fund's
portfolio. The Funds also may buy and sell put and call options on indices. Such
index options serve to hedge against overall fluctuations in the securities
markets or market sectors generally, rather than anticipated increases or
decreases in the value of a particular security.
Further, the Funds may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Funds also may buy index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. A Fund may use interest rate futures contracts and
options thereon to hedge against changes in the general level of interest rates.
The Funds may write and purchase put and call options on securities, indices and
currencies that are traded on recognized securities exchanges and on
over-the-counter ("OTC") markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), have the effect of limiting the extent to which the Funds may enter
into forward contracts or futures contracts, or engage in options transactions.
See "Taxes" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Funds may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Funds may each enter into forward
currency contracts either with respect to specific transactions or with respect
to its portfolio positions. For example, when the Funds anticipate making a
Prospectus Page 16
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
purchase or sale of a security, it may enter into a forward currency contract in
order to set the rate (either relative to the U.S. dollar or another currency)
at which a currency exchange transaction related to the purchase or sale will be
made. Further, when LGT Asset Management believes that a particular currency may
decline compared to the U.S. dollar or another currency, the Funds may enter
into a forward contract to sell the currency LGT Asset Management expects to
decline in an amount up to the value of that Fund's portfolio securities
denominated in a foreign currency. The Funds may also purchase put or call
options on currencies, futures contracts on currencies and options and options
on futures contracts on currencies to hedge against movements in exchange rates.
Although either Fund might not employ any of the foregoing strategies, its use
of forward currency contracts, futures contracts, and options would involve
certain investment risks and transaction costs to which it might not otherwise
be subject. These risks include: (1) dependence on LGT Asset Management's
ability to predict movements in the prices of individual securities,
fluctuations in the general securities markets and movements in interest rates
and currency markets; (2) imperfect correlation, or even no correlation, between
movements in the price of forward contracts, options, futures contracts or
options thereon and movements in the price of the currency or security hedged or
used for cover; (3) the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which the Funds invest;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible inability of a Fund to purchase or sell a portfolio security at
a time when it would otherwise be favorable for it to do so, or the possible
need for a Fund to sell a security at a disadvantageous time, due to the need
for the Fund to maintain "cover" or to set aside securities in connection with
hedging transactions; and (6) the possible need of a Fund to defer closing out
of certain options, futures contracts and options thereon and forward currency
contracts in order to qualify or continue to qualify for the beneficial tax
treatment afforded regulated investment companies under the Code. See
"Dividends, Other Distributions and Federal Income Taxation" herein and "Taxes"
in the Statement of Additional Information. If LGT Asset Management incorrectly
forecasts securities markets movements, currency exchange rates or interest
rates in utilizing a strategy for a Fund, it would be in a better position if it
had not hedged at all. The Funds may each also conduct its foreign currency
exchange transactions on a spot (I.E., cash) basis at the spot rate prevailing
in the foreign currency exchange market.
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RISK FACTORS
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions and its net currency
exposure. There is no assurance that the Emerging Markets Fund will achieve its
investment objective.
LGT Asset Management believes that the issuers of securities in emerging markets
often have sales and earnings growth rates which exceed those in developed
countries and that such growth rates may in turn be reflected in more rapid
share price appreciation. Accordingly, LGT Asset Management believes that the
Emerging Markets Fund's policy of investing in equity securities of companies in
emerging markets may enable the Emerging Markets Fund to achieve results
superior to those produced by mutual funds with similar objectives to those of
the Emerging Markets Fund that invest solely in equity securities of issuers
domiciled in the U.S. and/or in other developed markets.
Nonetheless, investing in the Emerging Markets Fund entails a substantial degree
of risk. Because of the special risks associated with investing in emerging
markets, an investment in the Emerging Markets Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed markets around the world.
Prospectus Page 17
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Emerging Markets Fund could lose its entire investment in
that market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain countries with emerging markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited.
The securities of non-U.S. issuers generally are not registered with the SEC,
nor are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. The Emerging Markets Fund's
net investment income and/or capital gains from its foreign investment
activities may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Emerging Markets Fund to make intended securities purchases due
to settlement problems could cause the Emerging Markets Fund to miss attractive
investment opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Emerging Markets Fund
due to subsequent declines in value of the portfolio security or, if the
Emerging Markets Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Emerging Markets Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Emerging Markets
Fund, to suspend redemption of its shares for any period during which an
emergency exists, as determined by the SEC. Accordingly, when the Emerging
Markets Fund believes that circumstances dictate, it will promptly apply to the
SEC for a determination that such an emergency exists within the naming of
Section 22(e) of the 1940 Act. During the period commencing from the Emerging
Markets Fund's identification of such conditions until the date of any SEC
action, the Emerging Markets Fund's portfolio securities in the affected markets
will be valued at fair value determined in good faith by or
Prospectus Page 18
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
under the direction of the Company's Board of Directors.
LATIN AMERICA GROWTH FUND. Pursuant to the 1940 Act, the Latin America Growth
Fund's classification as a non-diversified investment company allows it, with
respect to 50% of its assets, to invest more than 5% of its total assets in the
securities of any issuer. Consequently, as the Latin America Growth Fund may be
invested in the securities of a limited number of Latin American issuers, the
performance of any single issuer may have a more significant effect upon the
overall performance of the Latin America Growth Fund than if the Latin America
Growth Fund was a diversified investment company.
The Latin America Growth Fund normally invests at least 65% of its total assets
in the securities of Latin American issuers. Accordingly, an investment in the
Latin America Growth Fund requires consideration of certain factors not
typically associated with investing in most U.S. issuers.
Investing in securities of Latin American issuers may entail risks relating to
the potential political and economic instability of certain Latin American
countries and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Latin America Growth Fund could lose its entire
investment in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Accordingly, when the Latin America
Growth Fund believes that circumstances dictate, it will follow the procedures
as described above concerning the Emerging Markets Fund.
The Latin America Growth Fund may not invest more than 10% of its net assets in
illiquid securities. The Latin America Growth Fund will treat any Latin American
securities that are subject to restrictions on repatriation for more than seven
days, as well as any securities issued in connection with Latin American debt
conversion programs that are restricted as to remittance of invested capital or
profits, as illiquid securities for purposes of this limitation. The Latin
America Growth Fund will also treat repurchase agreements with maturities in
excess of seven days as illiquid securities.
The Latin America Growth Fund invests in securities denominated in currencies of
Latin American countries. Accordingly, changes in the value of these currencies
against the U.S. dollar will result in corresponding changes in the U.S. dollar
value of the Latin America Growth Fund's assets denominated in those currencies.
Such changes will also affect the Latin America Growth Fund's income.
In addition, many of the currencies of Latin American countries have experienced
steady devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Latin America Growth Fund's portfolio securities are denominated
may have a detrimental impact on the Latin America Growth Fund.
Some Latin American countries also may have fixed currencies whose values
against the U.S. dollar are not independently determined. In addition, there is
a risk that certain Latin American countries may restrict the free conversion of
their currencies into other currencies. Further, certain Latin American
currencies may not be internationally traded.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on
Prospectus Page 19
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
the economies and securities markets of certain Latin American countries.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Expropriation, confiscatory
taxation, nationalization, political, economic or social instability or other
developments could adversely affect the assets of the Latin America Growth Fund
held in particular Latin American countries. Furthermore, certain Latin American
countries may impose withholding taxes on dividends payable to the Latin America
Growth Fund at a higher rate than those imposed by other foreign countries. This
may reduce the Latin America Growth Fund's investment income available for
distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. Currently, Brazil is the largest debtor among
developing countries, Mexico is the second largest and Argentina the third. At
times certain Latin American countries have declared moratoria on the payment of
principal and/or interest on external debt.
Investment in Sovereign Debt involves a high degree of risk. The issuers or
governmental authorities that control the repayment of Sovereign Debt may not be
able or willing to make principal and/or interest payments when due in
accordance with the terms of such debt. Investors should be aware that the
Sovereign Debt instruments in which the Latin America Growth Fund may invest
involve great risk and are deemed to be the equivalent in terms of quality to
securities rated below investment grade by Moody's and S&P. A substantial
portion of the Sovereign Debt in which the Fund will invest, including Brady
Bonds, is issued as part of debt restructurings and such debt is to be
considered speculative. There is a history of defaults with respect to
commercial bank loans by public and private entities issuing Brady Bonds.
The Latin America Growth Fund and LGT Asset Management believe that carefully
selected investments in joint ventures, cooperatives, partnerships and state
enterprises and other similar vehicles which are illiquid (collectively,
"Special Situations") could enable the Latin America Growth Fund to achieve
capital appreciation substantially exceeding the appreciation the Latin America
Growth Fund would realize if it did not make such investments. However, in order
to limit investment risk, the Latin America Growth Fund will invest no more than
5% of its total assets in Special Situations.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Emerging Markets Fund or by the Latin America Growth Fund generally will
vary inversely with market interest rates. If interest rates in a market fall,
the Funds' debt securities issued by governments or companies in that market
ordinarily will increase in value. If market interest rates increase, however,
the debt securities owned by the Funds in that market will likely decrease in
value.
As discussed above, the Emerging Markets Fund may invest up to 20% of its total
assets in debt securities rated below investment grade and the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities of any
rating. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca, or 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 such lower
quality debt. For Moody's, Baa indicates the lowest degree of speculation and C
the highest degree of speculation for such lower quality debt. While such lower
quality debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. 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. Lower quality debt securities are also generally considered to be
subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic
Prospectus Page 20
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
conditions. These foreign debt securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market and Latin American governments
that issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank and may not be able or willing to make principal and/or interest
repayments as they come due. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and may be subordinated to the claims of
other creditors of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Funds. In
addition, the Funds may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and either Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Funds to obtain accurate market quotations for purposes of
valuing the Funds' portfolios. The Funds may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
A Fund 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 a Fund may have limited legal recourse in the event of a default.
Debt securities issued by governments in emerging or Latin American markets can
differ from debt obligations issued by private entities in that remedies from
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
holders of commercial bank debt may not contest payments to the holders of debt
securities issued by governments in emerging or Latin American markets in the
event of default by the governments under commercial bank loan agreements.
LGT Asset Management attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors. Nonetheless, investors should carefully review the investment objective
and policies of the Fund and consider their ability to assume the investment
risks involved before making an investment.
CURRENCY RISK. Since the Emerging Markets Fund and the Latin America Growth Fund
may invest substantially in securities denominated in currencies other than the
U.S. dollar, and since the
Prospectus Page 21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Funds may hold foreign currencies, each Fund will be affected favorably or
unfavorably by exchange control regulations or changes in the exchange rates
between such currencies and the U.S. dollar. Changes in currency exchange rates
will influence the value of each Fund's shares, and also may affect the value of
dividends and interest earned by the Funds and gains and losses realized by the
Funds. Currencies generally are evaluated on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
OTHER INFORMATION. The Emerging Markets Fund's and Latin America Growth Fund's
annual operating expenses, which are higher than those of many other investment
companies of comparable size, are believed by each Fund's management to be
comparable to expenses of other open-end management investment companies that
invest primarily in the securities of countries in a single geographic region or
regions.
The Emerging Markets Fund's and the Latin America Growth Fund's portfolio
turnover rates during the fiscal year ended October 31, 1995 were 114% and 125%,
respectively. See the sub-caption "Portfolio Trading and Turnover" in the
Statement of Additional Information. Increases in portfolio turnover would
involve correspondingly greater transaction costs in the form of brokerage
commissions or dealer spreads and other costs that a Fund will bear directly,
and could result in the realization of net capital gain, which would be taxable
when distributed to shareholders.
The investment objective of the Emerging Markets Fund and of the Latin America
Growth Fund may not be changed without the approval of a majority of the
respective Fund's outstanding voting securities. As defined in the 1940 Act and
as used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented, or (ii) more
than 50% of the outstanding shares. In addition, the Emerging Markets Fund and
the Latin America Growth Fund each have adopted certain investment limitations
as fundamental policies which also may not be changed without shareholder
approval. A complete description of these limitations is included in the
Statement of Additional Information. Unless specifically noted, the Emerging
Markets Fund's and the Latin America Growth Fund's investment policies described
in this Prospectus and in the Statement of Additional Information are not
fundamental policies and may be changed by a vote of a majority of the Company's
Board of Directors without shareholder approval.
Prospectus Page 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 1,000 employees; (b) any
account with assets of at least $25,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $25,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies comprising or affiliated with Liechtenstein
Global Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
Orders received by GT Global before the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time), on
any Business Day will be executed at the public offering price for the
applicable class of shares determined that day. A "Business Day" is any day
Monday through Friday on which the NYSE is open for business. All purchase
orders will be executed at the public offering price next determined after the
purchase order is received. The Funds and GT Global reserve the right to reject
any purchase order and to suspend the offering of shares for a period of time.
Fiduciaries and Financial Advisors may be required to provide information
satisfactory to GT Global concerning their eligibility to purchase Advisor Class
shares. For specific information on opening an account, please contact your
Financial Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. Accordingly, a bank wire
received by the close of regular trading on the NYSE, on a Business Day, will be
effected that day. A wire investment is considered received when the Transfer
Agent is notified that the bank wire has been credited to a Fund. Prior
telephonic or facsimile notice that a bank wire is being sent must be provided
to the Transfer Agent. An investor's bank may charge a service fee for wiring
money to the Funds. The Transfer Agent currently does not charge a service fee
for facilitating wire purchases, but reserves the right to do so in the future.
For more information, please refer to the Shareholder Account Manual in this
Prospectus.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing a Fund's shares will not be issued unless an investor submits a
written request to the Transfer Agent, or unless the investor's Financial
Advisor requests that the Transfer Agent provide certificates. Shares of a Fund
are recorded on a register by the Transfer Agent, and shareholders who do not
elect to
receive certificates have the same rights of ownership as if certificates had
been issued to them. Redemptions and exchanges by shareholders who hold
certificates may take longer to effect than similar transactions involving
non-certificated shares because the physical delivery and processing of properly
executed certificates is required. ACCORDINGLY, THE FUNDS AND GT GLOBAL
RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
Prospectus Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of any Fund may only be exchanged for Advisor Class shares
of the other GT 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 GT Global Mutual Fund
shares to be acquired may be legally made. EXCHANGES ARE NOT TAX-FREE AND MAY
RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX
PURPOSES. See "Dividends, Other Distributions and Federal Income Taxation."
In addition to the Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL AMERICA GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisor to request the prospectus of the
other GT Global Mutual Fund(s) being considered. Other investors should contact
GT Global. See the Shareholder Account Manual in this Prospectus for additional
information.
OTHER INFORMATION ABOUT EXCHANGES. Purchases, redemptions and exchanges should
be made for investment purposes only. A pattern of frequent exchanges, purchases
and sales is not acceptable and can be limited by a Fund's or GT 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 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. All redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request and any required supporting
documentation. Redemption requests received before the close of regular trading
on the NYSE on any Business Day will be effected at the net asset value
calculated on that day. Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee on each wire redemption sent, but reserves the right to do so
in the future. The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceeding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in a Wrap Fee Account or Advisory Account who is in doubt
as to
Prospectus Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
what documents are required should contact his or her Financial Advisor.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem Fund shares, see the Shareholder
Account Manual in this Prospectus or contact your Financial Advisor.
Prospectus Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. PLEASE BE CAREFUL TO REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS
PROVIDED. See "How to Invest;" "How to Make Exchanges;" "How to Redeem Shares;"
and "Dividends, Other Distributions and Federal Income Taxation -- Taxes" for
more information.
Each Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
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 GT
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: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT 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:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently, 4:00 p.m. Eastern time, unless weather, equipment failure
or other factors contribute to an earlier closing), each Business Day. Each
Fund's asset value per share is computed by determining the value of its total
assets (the securities it holds plus any cash or other assets, including
interest and dividends accrued but not yet received), subtracting all of its
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund are valued at the last sale price on the
exchange or in the OTC market in which such securities are primarily traded, as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid or asked prices for such
securities, or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when LGT Asset Management deems
it appropriate, prices obtained from a bond pricing service will be used.
Short-term debt investments are amortized to maturity based on their cost,
adjusted for foreign exchange translation and market fluctuations, provided that
such valuations represent fair value. When market quotations for futures and
options positions held by a Fund are readily available, those positions are
valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC markets which trade on days when the NYSE is closed
(such as Saturday). As a result, the net asset values of the Funds may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of the Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
its net investment income, if any, which includes dividends, accrued interest
and earned discount (including both original issue and market discounts) less
applicable expenses. Each Fund also annually distributes substantially all of
its realized net short-term capital gain (the excess of short-term capital gains
over short-term capital losses), net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net gains from foreign
currency transactions, if any. Each Fund may make an additional dividend or
other distribution if necessary to avoid a 4% excise tax on certain
undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares of a Fund will be higher than the
per share income dividends on shares of other classes of that Fund as a result
of the service and distribution fees applicable to those other shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the distributing Fund (or other GT Global
Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
Prospectus Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE REINVESTED
AUTOMATICALLY IN ADDITIONAL ADVISOR CLASS SHARES OF THE DISTRIBUTING FUND.
Reinvestments in another GT Global Mutual Fund may only be directed to an
account with the identical shareholder registration and account number. These
elections may be changed by a shareholder at any time; to be effective with
respect to a distribution, the shareholder or the shareholder's broker must
contact the Transfer Agent by mail or telephone at least 15 Business Days prior
to the payment date. THE FEDERAL INCOME TAX STATUS OF DIVIDENDS AND OTHER
DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gain regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional Fund
shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with a
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. In addition, if shares of a Fund
are purchased within 90 days before or after redeeming other shares of that Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Funds. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by the Funds.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as each Fund's investment manager and administrator include, but are
not limited to, determining the composition of the Fund's portfolio and placing
orders to buy, sell or hold particular securities; furnishing corporate officers
and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
each of the Funds pays LGT Asset Management investment management and
administration fees, computed daily and paid monthly, based on its average daily
net assets, at the annualized rate of .975% on the first $500 million, .95% on
the next $500 million, .925% on the next $500 million, and .90% on amounts
thereafter. These rates are higher than those paid by most mutual funds. LGT
Asset Management has undertaken to limit each Fund's expenses exclusive of
brokerage commissions, taxes, interest and extraordinary expenses to the annual
rate of 1.90% of the average daily net assets of the Fund's Advisor Class
shares.
LGT Asset Management also serves as each Fund's pricing and accounting agent.
The monthly fee for these services to LGT Asset Management is a percentage, not
to exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of GT Global
Mutual Funds and 0.02% to the assets in excess of $5 billion, and allocating the
result according to each Fund's, average daily net assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust 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. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consists
of GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31 , 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion. Of this amount, more than $6 billion was invested in emerging markets
including the securities of Latin America issuers.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the
Prospectus Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
resources of these various investment offices around the world in seeking to
achieve each Fund's investment objective. Many of the investment managers who
manage the GT Global Mutual Funds' portfolios are natives of the countries in
which they invest, speak local languages and/or live or work in the markets they
follow. The investment professionals primarily responsible for the portfolio
management of the Funds are as follows:
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Jonathan Chew Portfolio Manager since Fund inception Portfolio Manager for LGT Asset
London in 1992 Management since 1990; Portfolio
Manager for LGT Asset Management Ltd.
(Hong Kong) since 1988.
James M. Bogin Portfolio Manager since 1993 Portfolio Manager for LGT Asset
San Francisco Management since 1993; From 1989 to
1993, Mr. Bogin was a Fund Manager at
Nomura Investment Management Co.
(Tokyo).
John R. Legat Portfolio Manager since 1995 Portfolio Manager for LGT Asset
London Management and LGT Asset Management
PLC (London).
</TABLE>
LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Soraya M. Betterton Portfolio Manager since Fund inception Portfolio Manager for LGT Asset
San Francisco in 1991 Management.
</TABLE>
Prospectus Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
In placing securities orders for the Funds' portfolio transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker-dealer. Commissions or
discounts in foreign securities exchanges or OTC markets often are fixed and
generally are higher than those in U.S. securities exchanges or markets. 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 whch case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions. Consistent with its obligation to
obtain the best net results, LGT Asset Management may consider a broker/dealer's
sale of shares of the GT Global Mutual Funds as a factor in considering through
whom portfolio transactions will be effected. Brokerage transactions may be
executed through any Liechtenstein Global Trust affiliate.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of each Fund's Advisor Class shares. Like LGT Asset Management, GT
Global is a subsidiary of Liechtenstein Global Trust with offices at 50
California Street, 27th Floor, San Francisco, California 94111.
The Latin America Growth Fund has previously suspended the offering of its
shares upon the advice of LGT Asset Management that doing so was in the best
interests of the portfolio management process. As of the date of this
Prospectus, the Latin America Growth Fund has resumed sales of its shares based
upon LGT Asset Management's advice that it is consistent with prudent portfolio
management to do so. However, the Latin America Growth Fund reserves the right
to suspend sales again and Emerging Markets Fund reserves the right to suspend
sales in the future based upon the foregoing portfolio considerations.
LGT Asset Management or an affiliate thereof may make ongoing payments to
Financial Advisors and others that facilitate the administration and servicing
of Advisor Class shareholder accounts.
GT Global, at its own expense, may also provide promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other GT
Global Mutual Funds. In some instances compensation or promotional incentives
may be offered to brokers/dealers that have sold or may sell significant amounts
of shares during specified periods of time. Such compensation and incentives may
include, but are not limited to, cash, merchandise, trips and financial
assistance to broker/dealers in connection with preapproved conferences or
seminars, sales or training programs for invited sales personnel, payment for
travel expenses (including meals and lodging) incurred by sales personnel and
members of their families or other invited guests to various locations for such
seminars or training programs, seminars for the public, advertising and sales
campaigns regarding one or more of the GT 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, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Funds. While the matter is not free from doubt, the Board of Directors
believes that such laws should not preclude a bank from providing administration
or shareholder servicing support or preclude a bank's affiliates from acting as
a broker/dealer. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank and its affiliates from
continuing to perform all or part of its servicing or broker/dealer activities.
If a bank were prohibited from so acting, its shareholder clients would be
permitted to remain shareholders, and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
Prospectus Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, such as an additional investment,
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to a Fund's
automatic dividend reinvestment program may be provided quarterly. Shortly after
the end of the Funds' fiscal year on October 31 and fiscal half-year on April 30
of each year, shareholders will receive an annual and semiannual report,
respectively. These reports list the securities held by the relevant Fund(s) and
include the Funds' financial statements. Under certain circumstances, duplicate
mailings of such reports to the same household may be consolidated. In addition,
the federal income tax status of distributions made by the relevant Fund(s) to
shareholders will be reported after the end of the fiscal year on Form 1099-DIV.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
establish other funds, each corresponding to a distinct investment portfolio and
a distinct series of the Company's common stock. Shares of the Emerging Markets
Fund and the Latin America Growth Fund are entitled to one vote per share (with
proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's Funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
The Company normally will not hold annual meetings of shareholders, except as
required under the 1940 Act. The Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's Funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
Advisor Class shares are offered through this Prospectus to certain enumerated
investors. There are two other classes of shares offered to investors through a
separate prospectus: Class A shares and Class B shares.
CLASS A. Class A shares are sold at net asset value plus an initial sales charge
of up to 4.75% of the public offering price imposed at the time of purchase.
This initial sales charge is reduced or waived for certain purchases. Class A
shares of each Fund also bear annual service and distribution fees of up to
0.50% of the average daily net assets of that class. For the fiscal year ended
October 31, 1995, total operating expenses for the Class A shares were 2.14% for
the Emerging Markets Fund and 2.12% for the Latin America Growth Fund,
respectively, of average net assets.
CLASS B. Class B shares are sold at net asset value with no initial sales charge
at the time of purchase. Class B shares bear annual service and distribution
fees of up to 1.00% of the average daily net assets of that class, and investors
pay a contingent deferred sales charge of up to 5% of the lesser of the original
purchase price or the net asset value of such shares at the time of redemption.
This deferred sales charge is waived for certain redemptions and is reduced for
shares held more than one year. For the fiscal year ended October 31, 1995,
total operating expenses for the Class B shares were
Prospectus Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
2.64% for the Emerging Markets Fund and 2.62% for the Latin America Growth Fund,
respectively, of average net assets.
The different expenses borne by each class of shares will result in different
net asset values and dividends. The per share net asset value of the Advisor
Class shares of a Fund generally will be higher than that of the Class A and B
shares of that Fund because of the higher expenses borne by the Class A and B
shares. The per share dividends on Advisor Class shares of a Fund will generally
be higher than the per share dividends on Class A and B shares of that Fund as a
result of the service and distribution fees applicable with respect to Class A
and B shares. Consequently, during comparable periods, the Funds expect that the
total return on an investment in shares of the Advisor Class will be higher than
the total return on Class A or B shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of
each Fund. One hundred million shares have been classified as Class A shares of
each Fund, one hundred million shares have been classified as Class B shares of
each Fund, and one hundred million shares have been classified as Advisor Class
shares of each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of the Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of the Fund is equal as to earnings, assets and voting privileges, except
as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
Emerging Markets Fund is classified as a "diversified" fund under the 1940 Act
which means that, with respect to 75% of the Fund's total assets, no more than
5% will be invested in the securities of any one issuer, and the Fund will
purchase no more than 10% of the outstanding voting securities of any one
issuer.
The Latin America Growth Fund is classified as a "non-diversified" fund under
the 1940 Act which means that with respect to 50% of its total assets, no more
than 50% will be invested in the securities of any one issuer, and the Fund will
purchase no more than 10% of the outstanding voting securities of any one
issuer.
Because the Funds employ a Combined Prospectus, it is possible that a Fund might
become liable for a misstatement with respect to the other Fund in this Combined
Prospectus. The Board of Directors of the Company have considered this in
approving the use of a Combined Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at P.O. Box 7893, San
Francisco, California 94120-7893.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date established by the
Board of Directors.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the
Prospectus Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
same or different periods as those for which Standardized Return is quoted; it
may consist of an aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof. Non-Standardized Return may or
may not take sales charges into account; performance data calculated without
taking the effect of sales charges into account will be higher than data
including the effect of such charges.
Each Fund's performance data reflects past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible differences in calculation
methods should be considered when comparing a Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. A Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global and a
subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek,
California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Funds.
Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset Management, GT
Global and GT Global Investor Services, Inc. in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P., will conduct an annual audit of each Fund,
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company, or Trust, as applicable, and each Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 39
<PAGE>
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ADVISOR CLASS
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
[LGT LOGO]
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for
Uniform Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under
which the custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $500 minimum initial investment for each Fund is required. Checks should be made payable to "GT GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 413 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
405 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 424 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
416 / / GT GLOBAL EMERGING MARKETS FUND $ 406 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
411 / / GT GLOBAL HEALTH CARE FUND $ 423 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
415 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 404 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / GT GLOBAL INFRASTRUCTURE FUND $ 410 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / GT GLOBAL FINANCIAL SERVICES FUND $ 409 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / GT GLOBAL NATURAL RESOURCES FUND $ 408 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / GT GLOBAL CONSUMER PRODUCTS $ 418 / / GT GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
402 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 401 / / GT GLOBAL DOLLAR FUND $
---------- ----------
403 / / GT GLOBAL EUROPE GROWTH FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND
I/WE AGREE TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS'
TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC
INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH LOSS OR
DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE INVESTOR(S)
CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS
AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL GT GLOBAL, INC., G.T.
GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS,
INC. OR THE FUNDS' TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR
REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME
CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE
GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
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Date
X X
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X X
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</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name
- ------------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the GT Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
GT Global, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT
FUNDS, INC., GT GLOBAL EMERGING MARKETS FUND, GT GLOBAL LATIN AMERICA GROWTH
FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
LEMPV602006MC
<PAGE>
GT GLOBAL THEME FUNDS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Financial Services Fund ("Financial Services Fund"), GT
Global Infrastructure Fund ("Infrastructure Fund"), GT Global Natural Resources
Fund ("Natural Resources Fund"), GT Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), GT Global Health Care Fund ("Health
Care Fund") and GT 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 GT 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 GT Global Theme Funds' current Class A and Class B
Prospectus dated February 29, 1996, 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.
LGT Asset Management, Inc. ("LGT Asset Management") 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 GT Global, Inc. ("GT Global"). The Funds' transfer agent is
GT Global Investor Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
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Page No.
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<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 23
Directors and Executive Officers......................................................................................... 25
Management............................................................................................................... 27
Valuation of Fund Shares................................................................................................. 32
Information Relating to Sales and Redemptions............................................................................ 34
Taxes.................................................................................................................... 36
Additional Information................................................................................................... 39
Investment Results....................................................................................................... 40
Description of Debt Ratings.............................................................................................. 50
Financial Statements..................................................................................................... 52
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT 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 GT 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.
SELECTION OF EQUITY INVESTMENTS
In analyzing the natural resource industry, LGT Asset Management 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, LGT Asset Management 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 LGT Asset Management, 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 to satisfy redemptions.
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it (a) is organized under the
laws of or has its principal office in a particular country, or (b) normally
derives 50% or more of its total revenues from business in that country,
provided that, in LGT Asset Management's view, the value of such issuer's
securities will tend to reflect such country's development to a greater extent
than developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by LGT
Asset Management 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. LGT Asset
Management is not aware at this time of the existence of any investment or
exchange control regulations which
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL THEME FUNDS
might substantially impair the operations of the Theme Portfolios as described
in the Prospectus and this Statement of Additional Information. Restrictions may
in the future, however, make it undesirable to invest in certain countries. None
of the Theme Portfolios has a present intention of making any significant
investment in any country or stock market in which LGT Asset Management
considers the political or economic situation 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 Investment Company Act of 1940, as amended (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 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 LGT Asset Management, 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 and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. 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>
GT 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 LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, 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
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 becomes bankrupt, the
Theme Portfolios intend to enter repurchase agreements only with banks and
dealers believed by LGT Asset Management 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. LGT Asset Management will review
and monitor the creditworthiness of such institutions under the applicable
Board's general supervision.
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, 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
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL THEME FUNDS
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 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 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.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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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 LGT Asset
Management'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 LGT Asset Management 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 LGT Asset Management 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 LGT Asset Management 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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GT 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, LGT Asset Management 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, indices 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 LGT
Asset Management 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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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 greater 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 LGT Asset Management 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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GT 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 an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A 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 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
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GT GLOBAL THEME FUNDS
equal to the difference between the closing level of the index and the exercise
price times the multiplier, if the closing level is less than the exercise
price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a 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
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GT GLOBAL THEME FUNDS
effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the 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 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 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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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.
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, 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 Portfolio's 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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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 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 LGT Asset Management
believes will have a
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positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the 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.
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 is used for cover or otherwise set aside, 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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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.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell
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GT GLOBAL THEME FUNDS
and the time the Theme Portfolio may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the Theme Portfolio might obtain a less favorable
price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
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 1933 Act, are liquid or illiquid.
Each Board has delegated the function of making day-to-day determinations of
liquidity to LGT Asset Management, in accordance with procedures approved by
that Board. LGT Asset Management 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). LGT Asset
Management 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
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GT GLOBAL THEME FUNDS
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, LGT Asset Management
will take appropriate steps to evaluate the proposed investment, which may
include on-site inspection of the issuer, interviews with its management and
consultations with accountants, bankers and other specialists. There is
substantially less publicly available information about foreign companies than
there are reports and ratings published about U.S. companies and the U.S.
government. In addition, where public information is available, it may be less
reliable than such information regarding U.S. issuers. Issuers of securities in
foreign jurisdictions are generally not subject to the same degree of regulation
as are U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because each 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 a 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. LGT Asset Management will consider such difficulties when determining
the allocation of a Theme Portfolio's assets, although LGT Asset Management does
not believe that such difficulties will have a material adverse effect on a
Theme Portfolio's portfolio trading activities.
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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,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and
the United Kingdom) eliminated certain import tariffs and quotas and other trade
barriers with respect to one another over the past several years. LGT Asset
Management 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
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 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 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. 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 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.
DIVERSIFICATION REQUIREMENTS UNDER INTERNAL REVENUE CODE. The investment
flexibility of each Theme Portfolio may be restricted by the necessity of
satisfying certain diversification requirements in order to maintain the
qualification of the Theme Portfolio as a regulated investment company within
the meaning of the Internal Revenue Code of 1986, as amended (the "Code").
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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 its 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 affirmative vote 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, 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.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL THEME FUNDS
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;
(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 Portfolio's 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 affirmative vote 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;
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL THEME FUNDS
(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
(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 its 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 affirmative vote 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;
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL THEME FUNDS
(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 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.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL THEME FUNDS
------------------------
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.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, LGT Asset Management 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, LGT Asset Management 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 LGT Asset Management 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, LGT Asset Management may
select broker/dealers to execute that Theme Portfolio's portfolio transaction on
the basis of the research and brokerage services they provide to LGT Asset
Management 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 LGT Asset Management 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 LGT Asset Management determines in good
faith that such commission is reasonable in terms either of that particular
transaction or the overall responsibility of LGT Asset Management 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.
LGT Asset Management 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 LGT Asset Management 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 LGT Asset Management believes that coordination and
the ability to participate in volume transactions will be beneficial to that
Theme Portfolio.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL THEME FUNDS
Under a policy adopted by the Company's Board of Directors and the Portfolios'
Board of Trustees, and subject to the policy of obtaining the best net results,
LGT Asset Management may consider a broker/dealer's sale of the shares of the
Funds and the other portfolios for which LGT Asset Management 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
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 Liechtenstein Global Trust. 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, 1995, 1994 and 1993, the Health Care Fund
paid aggregate brokerage commissions of $545,743, $480,241 and $665,620,
respectively. For the fiscal years ended October 31, 1995, 1994 and 1993, the
Telecommunications Fund paid aggregate brokerage commissions of $2,253,982,
$5,674,965, and $2,051,270, respectively. For the fiscal year ended October 31,
1995, and 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 $38,814 and
$18,145, $122,399 and $111,512, and $98,462 and $132,572, respectively. For the
fiscal period December 30, 1994 (commencement of operations) to October 31,
1995, the Consumer Products and Services Portfolio paid aggregate brokerage
commissions of $17,605.
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. 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. The portfolio turnover rate will not be a limiting
factor when management deems portfolio changes appropriate. Higher portfolio
turnover involves correspondingly greater brokerage commissions and other
transaction costs that the Theme Portfolio will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to each
Fund's shareholders. For the fiscal years ended October 31, 1994 and 1995, the
Telecommunications Fund's portfolio turnover rates were 57% and 62%,
respectively. For the fiscal years ended October 31, 1994 and 1995, the Health
Care Fund's portfolio turnover rates were 64% and 99%, respectively. For the
fiscal period May 31, 1994 (commencement of operations) to October 31, 1994, and
for the fiscal year ended October 31, 1995, the portfolio turnover rates for the
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio were 53% and 170%, 18% and 45%, and 137% and 87%, respectively. For
the fiscal period December 30, 1994 (commencement of operations) to October 31,
1995, the portfolio turnover rate for the Consumer Products and Services
Portfolio was 240%.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL THEME FUNDS
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers and the Portfolios' Trustees and
Executive Officers are listed below. The term "Directors" as used below refers
to the Company's Directors and the Portfolios' Trustees collectively.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust since 1995; Director and President of LGT Asset Management Holdings, Inc. ("LGT
50 California Street Asset Management Holdings") since 1988; Director and President of LGT Asset Management
San Francisco, CA 94111 since 1989; Director of GT Global since 1987 and President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992, and President of G.T.
Insurance from 1992 to 1995. Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm): Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989, Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995 Senior Vice President - Finance and
Vice President and Administration of GT Global, GT Services and G.T. Insurance. Senior Vice President -
Chief Financial Officer Finance and Administration of LGT Asset Management Holdings and LGT Asset Management since
50 California Street 1994. From 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset Management
San Francisco, CA 94111 Holdings, LGT Asset Management, GT Global and GT Services. He was Vice President - Finance
of G.T. Insurance from 1992 to 1994; and a Director of LGT Asset Management, GT Global and
GT Services since 1991.
Kenneth W. Chancey, 50 Vice President - Mutual Fund Accounting of LGT Asset Management since 1992. Mr. Chancey
Vice President and Principal was Vice President of Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 49 Senior Vice President, General Counsel and Secretary of LGT Asset Management Holdings, LGT
Vice President and Secretary Asset Management, GT Global, GT Services and G.T. Insurance since February, 1996. Senior
50 California Street Vice President, Secretary and General Counsel of LGT Asset Management Holdings, LGT Asset
San Francisco, CA 94111 Management, GT Global, GT Services and G.T. Insurance from May 1994 to February 1996. Mr.
Lee was the Senior Vice President, General Counsel and Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each of the Strong Funds from October, 1991 through May,
1994. 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 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT Global, GT Services
Assistant Secretary and G.T. Insurance since February, 1996. Mr. Guarino has been an Assistant General Counsel
50 California Street of LGT Asset Management, GT Global and GT Services since 1991, and Assistant General
San Francisco, CA 94111 Counsel of G.T. Insurance since 1992. From 1989 to 1991, Mr. Guarino was an attorney at
The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management, GT Global, GT
Assistant Secretary Services and G.T. Insurance since February, 1996. Mr. Thelander has been an Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. Mr. Thelander was an associate
San Francisco, CA 94111 at the law firm of Kirkpatrick & Lockhart LLP from 1993 to 1994. Prior thereto, he was an
attorney with the U.S. Securities and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Ms.
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), Growth Portfolio
and Global High Income Portfolio, which also are registered investment companies
managed by LGT Asset Management. Each Director and Officer serves in total as a
Director and/or Trustee and Officer, respectively, of 10 registered investment
companies with 40 series managed or administered by LGT Asset Management. The
Company pays each Director who is not a director, officer or employee of LGT
Asset Management 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. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley, who are not directors, officers or employees of
LGT Asset Management or any affiliated company, received total compensation of
$36,705, $34,230, $36,755 and $33,706, respectively, from the Company for their
services as Directors. For the fiscal year ended October 31, 1995, Mr. Anderson,
Mr. Bayley, Mr. Patterson and Ms. Quigley, received total compensation of
$92,177, $87,869, $92,261 and $86,958, respectively, from the 40 investment
companies managed or administered by LGT Asset Management 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 February
22, 1996, 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, with the exception of
the Financial Services Fund and the Consumer Products and Services Fund. As of
February 22, 1996, the Officers and Directors and their families as a group
owned in the aggregate beneficially or of record 1.05% of the outstanding shares
of the Financial Services Fund and 9.85% of the Consumer Products and Services
Fund.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL THEME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
LGT Asset Management serves as each Portfolio's investment manager and
administrator under an Investment Management and Administration Contract between
each Portfolio and LGT Asset Management ("Portfolio Management Contract"). LGT
Asset Management serves as administrator to each Feeder Fund under an
administration contract between the Company and LGT Asset Management
("Administration Contract"). The Administration Contract will not be deemed an
advisory contract, as defined under the 1940 Act. As investment manager and
administrator, LGT Asset Management makes all investment decisions for each
Portfolio and, as administrator, administers each Portfolio's and each Feeder
Fund's affairs. Among other things, LGT Asset Management 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 LGT Asset Management 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 LGT Asset
Management. 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 may be renewed with respect to a Portfolio for
additional one-year terms, 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. 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 LGT
Asset Management 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, LGT Asset Management 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, exceeds 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. LGT Asset Management and GT 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
LGT Asset Management has agreed to reimburse each Feeder Fund if its expenses
exceed that amount.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
LGT Asset Management 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 LGT
Asset Management. As investment manager and administrator, LGT Asset Management
makes all investment decisions for the Health Care Fund and Telecommunications
Fund and administers the Health Care Fund's and Telecommunications Fund's
affairs. Among other things, LGT Asset Management furnishes the services and
pays the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL THEME FUNDS
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 LGT Asset Management 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 may be renewed for additional one-year terms 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 provides that with respect to the
Health Care Fund and Telecommunications Fund either the Company or LGT Asset
Management 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, LGT Asset Management 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, GT Global and LGT Asset
Management 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 LGT Asset Management
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>
GT GLOBAL THEME FUNDS
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to LGT Asset Management during
the periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1995...................................................................................................... $ 4,453,857
1994...................................................................................................... 4,353,688
1993...................................................................................................... 5,331,224
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1995...................................................................................................... $ 23,861,460
1994...................................................................................................... 21,926,187
1993...................................................................................................... 7,254,611
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1995............................................................................... $ 51,353
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 8,249
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1995............................................................................... $ 601,421
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 51,922
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1995............................................................................... $ 213,856
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 28,500
</TABLE>
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
December 30, 1994 (commencement of operations) to October 31, 1995........................................ $ 16,284
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, and for the fiscal year ended October 31, 1995, LGT Asset Management
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 and $51,353, $48,901 and $0, and
$28,500 and $213,856, respectively; for the same periods, the Financial Services
Fund, Infrastructure Fund and Natural Resources Fund paid administration fees of
$3,029 and $18,756, $19,370 and $208,892, and $10,436 and $74,485, respectively.
However, LGT Asset Management reimbursed those Funds for such fees in the
amounts of $3,029 and $18,756, $19,370 and $177,376, and $10,436 and $74,485,
respectively. (Accordingly, LGT Asset Management 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 and $70,109, $68,271 and $177,376, and $38,936 and
$288,341, respectively). For the fiscal period December 30, 1994 (commencement
of operations) to October 31, 1995, LGT Asset Management reimbursed the Consumer
Products and Services Portfolio for investment management and administration
fees in the amount of $16,284. For the same period, the Consumer Products and
Services Fund paid $5,933 in administration fees; however, LGT Asset Management
reimbursed the Fund in the amount of $5,933. Accordingly, LGT Asset Management
reimbursed the Consumer Products and Services Fund and its Portfolio investment
management and administration fees in the aggregate amount of $22,217.
For the fiscal year ended October 31, 1995, LGT Asset Management, 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, Natural
Resources Fund, and Consumer Products and Services Fund for expenses in the
additional amounts of $438,217, $30,769 and $244,975, respectively.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL THEME FUNDS
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, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted separate Distribution
Plans with respect to Class A and Class B shares of the Funds in accordance with
the provisions of Rule 12b-1 under the 1940 Act ("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 GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement. The following table discloses
payments made by the Theme Funds to GT Global under each Fund's Class A Plan and
Class B Plan for the Fund's fiscal year ended October 31, 1995:
HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1995............................................................... $ 2,021,331 $ 523,545
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1995............................................................... $ 7,238,541 $ 11,199,568
</TABLE>
FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1995............................................................... $ 20,817 $ 33,277
</TABLE>
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1995............................................................... $ 180,627 $ 473,441
</TABLE>
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1995............................................................... $ 73,794 $ 149,950
</TABLE>
CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
December 30, 1994 (commencement of operations) to October 31, 1995........................ $ 8,002 $ 7,388
</TABLE>
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, 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.
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, GT 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
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL THEME FUNDS
reviews the extent of such activity during the Health Care Fund's last three
fiscal years. The sales structure for the period November 1, 1992 through March
31, 1993 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>
1995...................................................................... $ 469,186 $ 67,325 $ 401,861
1994...................................................................... 1,544,456 131,040 1,413,416
1993...................................................................... 1,519,000 181,204 1,337,796
</TABLE>
The following table reviews the extent of such activity during the
Telecommunications Fund's fiscal year ended October 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
1995...................................................................... $ 4,151,523 $ 578,450 $ 3,573,073
1994...................................................................... 15,634,626 2,477,493 13,157,133
1993...................................................................... 18,545,000 2,002,928 16,542,072
</TABLE>
The following table reviews the extent of such activity for the Financial
Services Fund, Infrastructure Fund and Natural Resources Fund for each Fund's
fiscal year ended October 31, 1995 and for the fiscal period May 31, 1994
(commencement of operations) to October 31, 1994:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, 1995 COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Financial Services Fund................................................... $ 50,104 $ 6,892 $ 43,212
Infrastructure Fund....................................................... 584,424 67,021 517,403
Natural Resources Fund.................................................... 143,672 16,516 127,156
<CAPTION>
MAY 31, 1994 TO OCTOBER 31, 1994
- --------------------------------------------------------------------------
<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>
The following table reviews the extent of such activity for the Consumer
Products and Services Fund for the fiscal period December 30, 1994 (commencement
of operations) to October 31, 1995:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
DECEMBER 30, 1994 TO OCTOBER 31, 1995 COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Consumer Products and Services Fund....................................... $ 28,566 $ 3,380 $ 25,186
</TABLE>
GT Global receives no compensation or reimbursements relating to its
distribution efforts with respect to the Class A shares other than as described
above. GT 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 GT Global with regard to the GT
Global Theme Funds for the periods shown.
HEALTH CARE FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1995............................................................................. $ 178,859
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, 1995............................................................................. $ 4,770,375
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>
Year ended October 31, 1995............................................................................. $ 7,543
May 31, 1994 (commencement of operations) to October 31, 1994........................................... 847
</TABLE>
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL THEME FUNDS
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1995............................................................................. $ 193,268
May 31, 1994 (commencement of operations) to October 31, 1994........................................... 1,528
</TABLE>
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1995............................................................................. $ 73,935
May 31, 1994 (commencement of operations) to October 31, 1994........................................... 779
</TABLE>
CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
December 30, 1994 (commencement of operations) to October 31, 1994...................................... $ 986
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
GT 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.
As of October 31, 1995, the Health Care Fund, Telecommunications Fund, Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund paid LGT Asset Management fees of $30,660, $170,297, $616,
$5,836, $1,931 and $318, respectively, for accounting services.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by LGT Asset
Management, GT Global and other agents. These expenses include, in addition to
the advisory, administration, distribution, transfer agency, pricing and
accounting agency and brokerage fees discussed above, legal and audit expenses,
custodian fees, trustees' fees, organizational fees, fidelity bond and other
insurance premiums, taxes, extraordinary expenses and expenses of reports and
prospectuses sent to existing investors. The allocation of general Company
expenses and expenses shared 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
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL THEME FUNDS
securities are valued on the exchange determined by LGT Asset Management 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.
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
LGT Asset Management 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, unless a quotation from
only one dealer is available, in which case only that dealer's price will be
used, in the case of OTC options. When market quotations for futures and options
on futures held by a 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 (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. 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 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 LGT Asset Management, 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.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL THEME FUNDS
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.
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 or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
thirteen-month period, the purchaser must remit to GT Global the difference
between the sales charge actually paid and the sales charge 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 GT Global within twenty days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that 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
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL THEME FUNDS
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 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 GT Global.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares of a
Fund may be exchanged only for Class A shares of other GT Global Mutual Funds.
Class B shares of a Fund may be exchanged only for Class B shares of other GT
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 GT
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 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.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL THEME FUNDS
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 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 and to the Health Care Fund and Telecommunications Fund
of those transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FEEDER FUNDS. Each Portfolio is
treated as a separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each 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
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL THEME FUNDS
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 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 the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in its 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 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.
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).
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL THEME FUNDS
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. Gains from foreign currencies (except certain gains that may be
excluded by future regulations), and gains from the disposition of 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 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 ("Section 988" gains or losses).
Each Section 988 gain or loss generally is computed separately and treated as
ordinary income or loss. In the case of overlap between Sections 1256 and 988,
special provisions determine the character and timing of any income, gain or
loss. Each 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
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL THEME FUNDS
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.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) Ltd. in
Tokyo; LGT Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE
Ltd. located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
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 are included in reliance upon such
opinion given upon the authority of said firm as experts in accounting and
auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company at any time or to grant the use of such names to any
other company.
Statement of Additional Information Page 38
<PAGE>
GT 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)P(1+T)to the
power of 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:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.10%
January 27, 1992 through October 31, 1995............................................................. n/a
November 1, 1990 through October 31, 1995............................................................. 12.56%
August 7, 1989 through October 31, 1995............................................................... 12.05 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.49 %
January 27, 1992 through October 31, 1995............................................................. 11.08 %
November 1, 1990 through October 31, 1995............................................................. n/a
August 7, 1989 through October 31, 1995............................................................... 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, 1995.................................................................... 14.17%
April 1, 1993 through October 31, 1995................................................................ 46.06%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.96 %
April 1, 1993 through October 31, 1995................................................................ 33.92 %
</TABLE>
The Standarized Returns for the Class B Shares of the Health Care Fund and
Telecommunications Fund, which were first offered April 1, 1993, stated as
average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.17%
April 1, 1993 through October 31, 1995................................................................ 15.79%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.96 %
April 1, 1993 through October 31, 1995................................................................ 11.97 %
</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, 1995.................................................................... 19.79 % -2.88 %
January 27, 1992 through October 31, 1995............................................................. n/a 55.88 %
August 7, 1989 through October 31, 1995............................................................... 113.42 % 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, 1995.................................................................... 19.17%
April 1, 1993 through October 31, 1995................................................................ 49.06%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -3.37 %
April 1, 1993 through October 31, 1995................................................................ 36.92 %
</TABLE>
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL THEME FUNDS
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:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.79%
January 27, 1992 through October 31, 1995............................................................. n/a
November 1, 1990 through October 31, 1995............................................................. 13.66%
August 7, 1989 through October 31, 1995............................................................... 12.93 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -2.88 %
January 27, 1992 through October 31, 1995............................................................. 12.53 %
November 1, 1990 through October 31, 1995............................................................. n/a
August 7, 1989 through October 31, 1995............................................................... n/a
</TABLE>
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:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.17%
April 1, 1993 through October 31, 1995................................................................ 16.71%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -3.37 %
April 1, 1993 through October 31, 1995................................................................ 12.93 %
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -2.29% -7.50% -11.97%
May 31, 1994 through October 31, 1995........................................ -0.47% 0.65% -3.14%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -2.29% -7.50% -11.97%
May 31, 1994 through October 31, 1995........................................ -0.67% -0.92% -4.42%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class B shares, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -3.02 % -8.20% -12.64%
May 31, 1994 through October 31, 1995........................................ -0.50 % 1.25% -4.39%
</TABLE>
The Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -3.02 % -8.20% -12.64%
May 31, 1994 through October 31, 1995........................................ -0.35 % 0.88% -3.11%
</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 for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 2.58 % -2.89 %
May 31, 1994 through October 31, 1995........................................ 4.29 % 5.95 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -7.58 %
May 31, 1994 through October 31, 1995........................................ 0.34 %
</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 for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 1.98 % -3.37 %
May 31, 1994 through October 31, 1995........................................ 3.50 % 5.25 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -8.05 %
May 31, 1994 through October 31, 1995........................................ -0.41 %
</TABLE>
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL THEME FUNDS
The Non-Standardized Returns for the Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 2.58 % -2.89 %
May 31, 1994 through October 31, 1995........................................ 3.00 % 4.16 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -7.58 %
May 31, 1994 through October 31, 1995........................................ 0.24 %
</TABLE>
The Non-Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as avarage annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 1.98% -3.37%
May 31, 1994 through October 31, 1995........................................ 2.45% 3.67%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -8.50%
May 31, 1994 through October 31, 1995........................................ -0.29%
</TABLE>
The Standardized Return for the Class A shares of Consumer Products and Services
Fund stated as aggregate total return for the period December 30, 1994
(commencement of operations) to October 31, 1995 was 21.58%. Standardized Return
for Consumer Products and Service Fund's Class B shares, stated as aggregate
total return, for the same period was 22.12%.
The Non-Standardized Return for the Class A shares of Consumer Products and
Services Fund stated as aggregate total return for the period December 30, 1994
(commencement of operations) to October 31, 1995 was 27.65%. Non-Standardized
Return for such Fund's Class B shares for the same period, stated as aggregate
return, was 27.12%.
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKET
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present or prospective shareholders compare
a Fund with, but not limited to, 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 Lehman Brothers 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 ("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
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard 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
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL THEME FUNDS
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.
(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 Service, Inc., Fitch Investor's Service, Inc.,
Standard & Poor's.
(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. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J.P. Morgan, Morgan
Stanley, Smith Barney Shearson, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P., and
Ibbottson Associates, may be used, as well as information reported by the
Federal Reserve and the respective Central Banks of various nations. In
addition, GT Global may use performance rankings, ratings and commentary
reported periodically in national financial publications, including 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.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL THEME FUNDS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT 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.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
LGT Asset Management, 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 certain
indices relate only to government bonds. Each of these factors will cause the
performance of each Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
or rankings by DALBAR Surveys, Inc. in advertising materials.
GT 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. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. 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, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT 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
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL THEME FUNDS
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 GT 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. In sales material and advertisements, 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 (or, if
less, 100% of compensation) each year to an IRA. 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 plans
("SEPs" or "SEP-IRAs") and salary-reduction SEPs provide self-employed
individuals (and any eligible employees) with benefits similar to Keogh-type
plans or Code Section 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 CODE SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Code Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
GT 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.
From time to time, the Funds and GT Global will quote certain data regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including but
not limited to, the economic and financial data of such financial organizations
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 Industry
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, GT Guide
to World Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World.
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.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL THEME FUNDS
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, industry or market: International Finance
Corporation, GT Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset Management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE GT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the GT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee, which sets broad guidelines for asset
allocation and currency management, based on LGT Asset Management'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.
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. GT 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.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL THEME FUNDS
HEALTH CARE FUND
From time to time the Fund and GT 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
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or GT
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
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Health Care Fund and LGT Asset Management 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). LGT Asset Management
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 LGT Asset
Management, 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.
LGT Asset Management believes that the anticipated increase in the world's
elderly population could increase demand for health care products and services.
For example, according to data compiled by LGT Asset Management, 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. From time to time, the Fund and GT Global will
quote information including, but not limited to, international data regarding
populations, birth rates, mortality rates, life expectancy, health care
expenditures, and gross domestic product vs. life expectancy. The information
quoted has not been independently verified by the Fund or GT Global and will be
based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, 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
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization of telecommunications companies
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL THEME FUNDS
The information quoted has not been independently verified by the Fund or GT
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
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.
LGT Asset Management 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.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and GT 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
/ / Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or GT
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
INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL THEME FUNDS
/ / New technologies, products and services used in infrastructure
industries
FINANCIAL SERVICES FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
NATURAL RESOURCES
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 48
<PAGE>
GT 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 senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
STANDARD & POOR'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.
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 there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment 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 as
well-assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- 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.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL THEME FUNDS
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 judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the 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 "CCC" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "B" or "B-" rating.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL THEME FUNDS
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 each Theme Fund (except Consumer Products
and Services Fund) at October 31, 1995 and for the fiscal year then ended, and
the audited financial statements of Consumer Products and Services Fund for the
period December 30, 1994 (commencement of operations) to October 31, 1995 appear
on the following pages.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Financial Services Fund 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, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year then ended and 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 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, 1995 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 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 Financial Services Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and 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 15, 1995
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Financial Services Portfolio
(cost $9,002,833) (Note 1)....................... $ 9,793,244
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 508,326
Unamortized organizational costs (Note 1)......... 45,222
Receivable for Fund shares sold................... 14,613
-----------
Total assets.................................... 10,361,405
-----------
Liabilities:
Payable for professional fees..................... 25,862
Payable for printing and postage expenses......... 23,965
Payable for administration fees (Note 2).......... 18,755
Payable for registration and filing fees.......... 7,768
Payable for service and distribution expenses
(Note 2)......................................... 6,302
Payable for transfer agent fees (Note 2).......... 5,473
Payable for Fund shares repurchased............... 4,661
Payable for Directors' fees and expenses (Note
2)............................................... 672
Payable for fund accounting fees (Note 2)......... 229
Other accrued expenses............................ 1,933
-----------
Total liabilities............................... 95,620
-----------
Net assets.......................................... $10,265,785
-----------
-----------
Class A:
Net asset value and redemption price per share
($5,687,073 DIVIDED BY 477,029 shares
outstanding)....................................... $ 11.92
-----------
-----------
Maximum offering price per share
(100/95.25 of $11.92) *............................ $ 12.51
-----------
-----------
Class B:+
Net asset value and offering price per share
($4,547,654 DIVIDED BY 384,353 shares
outstanding)....................................... $ 11.83
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share
($31,058 DIVIDED BY 2,599 shares outstanding)...... $ 11.95
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $ 9,845,942
Undistributed net investment income............... 86,274
Accumulated net realized loss on investments and
foreign currency transactions.................... (456,842)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Financial Services Portfolio.............. 13,982
Net unrealized appreciation of investments --
Global Financial Services Portfolio.............. 776,429
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $10,265,785
-----------
-----------
<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 53
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income -- Global Financial Services Portfolio.... $ 224,978
Interest income -- Global Financial Services Portfolio.... 60,482
----------
Total investment income................................. 285,460
----------
Expenses:
Expenses -- Global Financial Services Portfolio........... 103,397
Registration and filing fees.............................. 174,700
Printing and postage expenses............................. 133,800
Legal fees................................................ 82,518
Service and distribution expenses: (Note 2)
Class A.................................. $ 20,817
Class B.................................. 33,277 54,094
----------
Audit fees................................................ 52,550
Transfer agent fees (Note 2).............................. 51,593
Administration fees (Note 2).............................. 18,756
Directors' fees and expenses (Note 2)..................... 11,950
Amortization of organization costs (Note 1)............... 12,620
Fund accounting fees (Note 2)............................. 1,930
Other expenses............................................ 4,491
----------
Total expenses before reductions........................ 702,399
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2).............................................. (508,326)
Expense reductions -- Global Financial Services
Portfolio............................................. (1,771)
----------
Total net expenses...................................... 192,302
----------
Net investment income....................................... 93,158
----------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
Financial Services Portfolio.............. (405,844)
Net realized loss on foreign currency
transactions -- Global
Financial Services Portfolio.............. (32,894)
----------
Net realized loss during the year....................... (438,738)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies -- Global Financial
Services Portfolio........................ 13,973
Net change in unrealized appreciation of
investments -- Global
Financial Services Portfolio.............. 743,739
----------
Net unrealized appreciation during the year............. 757,712
----------
Net realized and unrealized gain on investments and foreign
currencies................................................. 318,974
----------
Net increase in net assets resulting from operations........ $ 412,132
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................... $ 93,158 $ 5,694
Net realized loss on investments and
foreign currency transactions -- Global
Financial Services Portfolio.............. (438,738) (32,440)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global Financial
Services Portfolio........................ 13,973 9
Net change in unrealized appreciation of
investments -- Global Financial Services
Portfolio................................. 743,739 32,690
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 412,132 5,953
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 10,643,479 5,652,003
Decrease from capital shares repurchased... (6,199,828) (347,954)
----------------- -----------------
Net increase from capital share
transactions............................ 4,443,651 5,304,049
----------------- -----------------
Total increase in net assets................. 4,855,783 5,310,002
Net assets:
Beginning of period........................ 5,410,002 100,000
----------------- -----------------
End of period.............................. $10,265,785 $5,410,002
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
--------------------------------- --------------------------------- -------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF TO
OCTOBER 31, OPERATIONS) TO OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995(D) OCTOBER 31, 1994 1995(D) OCTOBER 31, 1994 1995
------------ ------------------- ------------ ------------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.62 $ 11.43 $ 11.60 $ 11.43 $ 11.09
------------ ------- ------------ ------- -------------
Income from investment operations:
Net investment income................. 0.17* 0.02* 0.11* 0.00* 0.09*
Net realized and unrealized gain on
investments.......................... 0.13 0.17 0.12 0.17 0.77
------------ ------- ------------ ------- -------------
Net increase from investment
operations......................... 0.30 0.19 0.23 0.17 0.86
------------ ------- ------------ ------- -------------
Net asset value, end of period.......... $ 11.92 $ 11.62 $ 11.83 $ 11.60 $ 11.95
------------ ------- ------------ ------- -------------
------------ ------- ------------ ------- -------------
Total investment return (b)............. 2.58 % 1.66%(c) 1.98 % 1.49%(c) 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,687 $ 3,175 $ 4,548 $ 2,235 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 1.46 % 0.66%(a) 0.96 % 0.16%(a) 1.96%(a)
Without expense reductions and
reimbursement from G.T. Capital...... (5.34)% (7.26)%(a) (5.84)% (7.76)%(a) (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 2.34 % 2.40%(a) 2.84 % 2.90%(a) 1.84%(a)
Without expense reductions and
reimbursement from G.T. Capital...... 9.14 % 10.32%(a) 9.64 % 10.82%(a) 8.64%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Total investment return does not include sales charges.
(c) Not annualized.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income per share would have been reduced by $0.59, $0.59,
$0.30 for Class A, Class B, and Advisor Class, respectively, for the
period ended October 31, 1995, and $0.23 for Class A and Class B from
May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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
$437,824, of which $22,442 expires in 2002 and $415,382 expires in 2003.
(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 initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $63,100. 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
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained $6,892
of such sales charges. G.T. Global also makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $7,543. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $616 to G.T. Capital.
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 58
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
3. CAPITAL SHARES
At October 31, 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
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
---------------------- ---------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 669,827 $ 7,432,400 288,905 $3,352,036
Shares repurchased......................................................... (465,993) (5,162,753) (20,084) (233,975)
--------- ----------- --------- ----------
Net increase............................................................... 203,834 $ 2,269,647 268,821 $3,118,061
--------- ----------- --------- ----------
--------- ----------- --------- ----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
---------------------- ---------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 286,019 $ 3,181,342 198,242 $2,299,967
Shares repurchased......................................................... (94,377) (1,037,075) (9,906) (113,979)
--------- ----------- --------- ----------
Net increase............................................................... 191,642 $ 2,144,267 188,336 $2,185,988
--------- ----------- --------- ----------
--------- ----------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
----------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,599 $ 29,737
Shares repurchased......................................................... -- --
--------- -----------
Net increase............................................................... 2,599 $ 29,737
--------- -----------
--------- -----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.071 per share (representing an approximate total of
$71,998). The total amount of dividend and capital gain taxes paid by the Fund
to such countries was approximately $0.017 per share (representing an
approximate total of $17,755).
Statement of Additional Information Page 59
<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 portfolio of investments, as of
October 31, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets and supplementary data for the year then
ended and 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
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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Financial Services Portfolio as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and
supplementary data for the year then ended and 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 15, 1995
Statement of Additional Information Page 60
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Banks-Regional (24.5%)
Banco Commercial S.A. - 144A ADR{.} -/- {\/} .............. URGY 11,300 $ 189,274 1.9
Unidanmark AS "A" ......................................... DEN 4,000 183,788 1.9
Thai Farmers Bank, Ltd. - Foreign-/- ...................... THAI 21,100 174,435 1.8
Sparbanken Sverige AB "A" ................................. SWDN 15,000 158,287 1.6
Den Danske Bank ........................................... DEN 2,280 151,087 1.5
Bancorp Hawaii, Inc. ...................................... US 4,000 134,000 1.4
First Tennessee National Corp. ............................ US 2,400 128,400 1.3
Cullen/Frost Bankers, Inc. ................................ US 2,500 127,500 1.3
BayBanks, Inc. ............................................ US 1,500 121,500 1.2
Fokus Banken AS-/- ........................................ NOR 23,600 119,975 1.2
Anglo-Irish Bank Corp. PLC ................................ IRE 109,000 110,258 1.1
Bank of Melbourne Ltd. ................................... AUSL 19,800 100,417 1.0
Mellon Bank Corp. ......................................... US 2,000 100,250 1.0
Union Bank Corp. ......................................... US 2,000 100,250 1.0
Espirito Santo Financial Holding S.A. - ADR{\/} .......... LUX 9,000 99,000 1.0
Advance Bank of Australia Ltd. ............................ AUSL 13,000 96,025 1.0
Allied Irish Bank PLC ..................................... IRE 17,500 88,475 0.9
Westpac Banking Corp., Ltd. ............................... AUSL 20,000 82,090 0.8
PT Bank Internasional Indonesia - Foreign ................. INDO 23,000 80,551 0.8
Commerce Bancorp, Inc. .................................... US 3,000 69,375 0.7
Glacier Bancorp, Inc. ..................................... US 550 11,275 0.1
------------
2,426,212
------------
Banks-Money Center (17.2%)
Bank of Ireland ........................................... IRE 36,000 239,378 2.4
Bank Hapoalim Ltd.-/- ..................................... ISRL 133,000 211,494 2.2
HSBC Holdings PLC ......................................... HK 12,000 174,617 1.8
Bangkok Bank Co., Ltd. - Foreign .......................... THAI 14,300 147,774 1.5
National Westminster Bank PLC ............................. UK 14,800 147,602 1.5
Commercial Bank of Korea-/- ............................... KOR 9,900 110,348 1.1
Krung Thai Bank Ltd. - Foreign ............................ THAI 24,750 98,370 1.0
Bank Leumi Le - Israel-/- ................................. ISRL 67,500 92,833 1.0
Sumitomo Bank ............................................. JPN 5,000 88,543 0.9
Mitsubishi Bank ........................................... JPN 4,000 78,270 0.8
Banco O'Higgins - ADR{\/} ................................ CHLE 3,600 76,950 0.8
Fuji Bank Ltd. ............................................ JPN 4,000 74,357 0.8
Dai-Ichi Kangyo Bank Ltd. ................................. JPN 4,000 67,704 0.7
Citicorp .................................................. US 1,000 64,875 0.7
------------
1,673,115
------------
Securities Brokers (12.4%)
Daiwa Securities Co., Ltd. ................................ JPN 14,000 164,368 1.7
Edwards (A.G.), Inc. ...................................... US 5,600 142,800 1.5
Nikko Securities Co., Ltd. ................................ JPN 14,000 130,672 1.3
Nomura Securities Co., Ltd. ............................... JPN 7,000 128,070 1.3
Peregrine Investment Holdings Ltd. ........................ HK 100,000 127,406 1.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 61
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Securities Brokers (Continued)
Dean Witter, Discover & Co. ............................... US 2,500 $ 124,375 1.3
Yamaichi Securities ....................................... JPN 22,000 115,370 1.2
Charles Schwab Corp. ...................................... US 4,600 105,225 1.1
Kankaku Securities Co.-/- ................................. JPN 27,000 87,173 0.9
Hanshin Securities Co. .................................... KOR 3,500 78,225 0.8
------------
1,203,684
------------
Other Financial (10.7%)
U.S. Order, Inc. .......................................... US 13,100 196,500 2.0
Aboitiz Equity Ventures, Inc.-/- .......................... PHIL 730,000 139,088 1.4
Transaction Network Service-/- ............................ US 6,000 138,000 1.4
Acom Co., Ltd. ............................................ JPN 4,000 130,320 1.3
DST Systems, Inc. ......................................... US 5,000 105,000 1.1
Shohkoh Fund .............................................. JPN 600 104,491 1.1
Compagnie Financiere de Paribas S.A. ...................... FR 1,800 99,049 1.0
JACCS Co., Ltd. ........................................... JPN 10,000 91,185 0.9
State Street Boston Corp. ................................. US 1,250 48,594 0.5
------------
1,052,227
------------
Investment Management (8.1%)
Alliance Capital Management L.P. .......................... US 12,200 256,199 2.6
Invesco PLC - ADR{\/} ..................................... UK 6,000 229,499 2.3
Franklin Resources, Inc. .................................. US 2,000 101,500 1.0
Invesco PLC-/- ............................................ UK 23,300 89,488 0.9
M & G Group PLC ........................................... UK 3,500 72,191 0.7
Eaton Vance Corp. ........................................ US 1,600 58,400 0.6
------------
807,277
------------
Consumer Finance (5.2%)
First Financial Caribbean Corp. ........................... US 10,000 178,124 1.8
Nichiei Co., Ltd. ........................................ JPN 2,000 124,254 1.3
Promise Co., Ltd. ......................................... JPN 3,000 118,286 1.2
Green Tree Financial Corp. ................................ US 3,400 90,525 0.9
------------
511,189
------------
Insurance - Multi-Line (4.6%)
Corporacion Mapfre ........................................ SPN 4,000 205,068 2.1
Allmerica Financial Corp. ................................. US 5,000 125,625 1.3
Axa Group ................................................. FR 2,036 113,118 1.2
------------
443,811
------------
Insurance - Property-Casualty (3.6%)
RenaissanceRe Holdings Ltd. ............................... US 4,000 108,500 1.1
Mid Ocean Ltd. ............................................ US 2,700 95,513 1.0
MBIA, Inc. ................................................ US 1,200 83,550 0.9
AMBAC, Inc. .............................................. US 1,300 54,763 0.6
------------
342,326
------------
Real Estate Investment Trust (2.8%)
Alexander Haagen Properties, Inc. ......................... US 8,900 97,900 1.0
Beacon Properties Corp. ................................... US 4,300 93,525 1.0
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 62
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Real Estate Investment Trust (Continued)
Evans Withycombe Residential, Inc. ........................ US 4,000 $ 75,500 0.8
------------
266,925
------------
Savings & Loans (2.0%)
Leader Financial Corp. .................................... US 3,000 106,875 1.1
Long Island Bancorp, Inc. ................................. US 3,800 86,925 0.9
------------
193,800
------------
Banks-Super Regional (1.6%)
NationsBank Corp. ......................................... US 1,500 98,625 1.0
BankAmerica Corp. ......................................... US 1,000 57,500 0.6
------------
156,125
------------
Insurance-Life (0.9%)
Mapfre Vida Seguros ....................................... SPN 1,700 89,943 0.9
------------ -----
TOTAL EQUITY INVESTMENTS (cost $8,390,205) ................. 9,166,634 93.6
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $860,000 U.S. Treasury Strips due
2/15/02 (market value of collateral is $595,179, including
accrued interest). (cost $575,093) ...................... 575,093 5.9
------------ -----
TOTAL INVESTMENTS (cost $8,965,298) ......................... 9,741,727 99.5
Other Assets and Liabilities ................................ 51,617 0.5
------------ -----
NET ASSETS .................................................. $ 9,793,344 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $9,793,344.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} 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.
* For Federal income tax purposes, cost is $8,976,777 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 969,371
Unrealized depreciation: (204,421)
-------------
Net unrealized appreciation: $ 764,950
-------------
-------------
</TABLE>
Abbreviation:
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 63
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 2.8 2.8
Chile (CHLE/CLP) ..................... 0.8 0.8
Denmark (DEN/DKK) .................... 3.4 3.4
France (FR/FRF) ...................... 2.2 2.2
Hong Kong (HK/HKD) ................... 3.1 3.1
Indonesia (INDO/IDR) ................. 0.8 0.8
Ireland (IRE/IEP) .................... 4.4 4.4
Israel (ISRL/ILS) .................... 3.2 3.2
Japan (JPN/JPY) ...................... 15.4 15.4
Korea (KOR/KRW) ...................... 1.9 1.9
Luxembourg (LUX/ECU) ................. 1.0 1.0
Norway (NOR/NOK) ..................... 1.2 1.2
Philippines (PHIL/PHP) ............... 1.4 1.4
Spain (SPN/ESP) ...................... 3.0 3.0
Sweden (SWDN/SEK) .................... 1.6 1.6
Thailand (THAI/THB) .................. 4.3 4.3
United Kingdom (UK/GBP) .............. 5.4 5.4
United States (US/USD) ............... 35.8 6.4 42.2
Uruguay (URGY/UYP) ................... 1.9 1.9
------ --- -----
Total ............................... 93.6 6.4 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $9,793,344.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell Dollars) Price Date Appreciation
- ------------------------------------------------------------------------------- ------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Japanese Yen................................................................... 466,686 99.83000 11/14/95 $ 11,126
------------- ------------
Total Contracts to Sell (Receivable amount $477,812)........................... 466,686 $ 11,126
------------- ------------
</TABLE>
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 4.77%
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 64
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$8,965,298) (Note 1)............................. $ 9,741,727
Foreign currencies (cost $524).................... 524
Receivable for securities sold.................... 767,833
Dividends and dividend withholding tax reclaims
receivable....................................... 13,818
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 11,126
Interest receivable............................... 20
Cash held as collateral for securities loaned
(Note 1)......................................... 223,830
-----------
Total assets.................................... 10,758,878
-----------
Liabilities:
Payable for securities purchased.................. 667,221
Payable for investment management and
administration fees (Note 2)..................... 51,353
Payable for professional fees..................... 7,214
Payable for printing and postage expenses......... 4,007
Payable for custodian fees (Note 1)............... 2,943
Payable for Trustees' fees and expenses (Note
2)............................................... 2,849
Other accrued expenses............................ 6,117
Collateral for securities loaned (Note 1)......... 223,830
-----------
Total liabilities............................... 965,534
-----------
Net assets.......................................... $ 9,793,344
-----------
-----------
Net assets consist of:
Paid in capital................................... $ 9,303,972
Accumulated net investment income................. 170,139
Accumulated net realized loss on investments and
foreign currency transactions.................... (471,178)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 13,982
Net unrealized appreciation of investments........ 776,429
-----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $ 9,793,344
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 65
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$10,038)................................................. $ 224,978
Interest income........................................... 60,482
----------
Total investment income................................. 285,460
----------
Expenses:
Investment management and administration fees (Note 2).... 51,353
Custodian fees (Note 1)................................... 25,175
Legal fees................................................ 12,300
Trustees' fees and expenses (Note 2)...................... 7,119
Audit fees................................................ 5,550
Other expenses............................................ 1,900
----------
Total expenses before reductions........................ 103,397
----------
Expense reductions (Note 1 & 4)....................... (1,771)
----------
Total net expenses...................................... 101,626
----------
Net investment income....................................... 183,834
----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $ (405,844)
Net realized loss on foreign currency
transactions.............................. (32,894)
----------
Net realized loss during the year....................... (438,738)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 13,973
Net change in unrealized appreciation of
investments............................... 743,739
----------
Net unrealized appreciation during the year............. 757,712
----------
Net realized and unrealized gain on investments and foreign
currencies................................................. 318,974
----------
Net increase in net assets resulting from operations........ $ 502,808
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 66
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)............... $ 183,834 $ (13,695)
Net realized loss on investments and
foreign currency transactions............. (438,738) (32,440)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 13,973 9
Net change in unrealized appreciation of
investments............................... 743,739 32,690
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 502,808 (13,436)
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 9,881,645 5,089,171
Withdrawals................................ (5,766,944) --
----------------- -----------------
Net increase from beneficial interest
transactions............................ 4,114,701 5,089,171
----------------- -----------------
Total increase in net assets................. 4,617,509 5,075,735
Net assets:
Beginning of period........................ 5,175,835 100,100
----------------- -----------------
End of period.............................. $ 9,793,344 $5,175,835
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 67
<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>
YEAR
ENDED MAY 31, 1994
OCTOBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO OCTOBER 31, 1994
------------ ------------------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 9,793 $ 5,176
Ratio of net investment income to
average net assets..................... 2.60 % 1.19 %(a)
Ratio of operating expenses to average
net assets:
With expense reductions............... 1.43 % 4.43 %(a)
Without expense reductions............ 1.46 % -- %*
Portfolio turnover rate................. 170 % 53 %
</TABLE>
- ----------------
(a) Annualized
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 68
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 of
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 year end, resulting from
changes in exchange rates.
(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 Contract") is an agreement between
two parties to buy
Statement of Additional Information Page 69
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
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 amounts 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 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-
Statement of Additional Information Page 70
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
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
At October 31, 1995, stocks with an aggregate value of approximately $204,255
were on loan to brokers. The loans were secured by cash collateral of $223,830.
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 year ended October 31, 1995, the Portfolio received $201 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) 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 prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Portfolio may focus its investments in certain related
financial 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 October 31, 1995, 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 year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$14,536,797 and $10,774,813, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $1,570 under these arrangements.
Statement of Additional Information Page 71
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Infrastructure Fund 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, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year then ended and 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 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, 1995 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 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 Infrastructure Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and 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 15, 1995
Statement of Additional Information Page 72
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Infrastructure Portfolio
(cost $85,307,015) (Note 1)...................... $86,009,828
Receivable for Fund shares sold................... 1,226,018
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 177,376
Unamortized organizational costs (Note 1)......... 36,908
Prepaid expenses.................................. 5,852
-----------
Total assets.................................... 87,455,982
-----------
Liabilities:
Payable for Fund shares repurchased............... 447,839
Payable for administration fees (Note 2).......... 192,675
Payable for service and distribution expenses
(Note 2)......................................... 59,114
Payable for printing and postage expenses......... 38,172
Payable for transfer agent fees (Note 2).......... 37,090
Payable for professional fees..................... 24,211
Payable for registration and filing fees.......... 10,118
Payable for Directors' fees and expenses (Note
2)............................................... 4,772
Payable for fund accounting fees (Note 2)......... 1,881
Other accrued expenses............................ 1,628
-----------
Total liabilities............................... 817,500
-----------
Net assets.......................................... $86,638,482
-----------
-----------
Class A:
Net asset value and redemption price per share
($36,240,755 DIVIDED BY 2,991,734 shares
outstanding)....................................... $ 12.11
-----------
-----------
Maximum offering price per share
(100/95.25 of $12.11) *............................ $ 12.71
-----------
-----------
Class B:+
Net asset value and offering price per share
($50,181,400 DIVIDED BY 4,171,435 shares
outstanding)....................................... $ 12.03
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share
($216,327 DIVIDED BY 17,819 shares outstanding).... $ 12.14
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $86,254,529
Accumulated net realized loss on investments and
foreign currency transactions.................... (318,860)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Infrastructure Portfolio.................. 158,380
Net unrealized appreciation of investments --
Global Infrastructure Portfolio.................. 544,433
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $86,638,482
-----------
-----------
<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 73
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income -- Global Infrastructure Portfolio......... $1,008,999
Interest income -- Global Infrastructure Portfolio......... 692,904
----------
Total investment income.................................. 1,701,903
----------
Expenses:
Expenses -- Global Infrastructure Portfolio................ 727,172
Service and distribution expenses: (Note 2)
Class A.................................. $ 180,627
Class B.................................. 473,441 654,068
-----------
Transfer agent fees (Note 2)............................... 383,369
Administration fees (Note 2)............................... 208,892
Registration and filing fees............................... 144,100
Printing and postage expenses.............................. 144,036
Legal fees................................................. 73,120
Audit fees................................................. 47,550
Directors' fees and expenses (Note 2)...................... 15,950
Fund accounting fees (Note 2).............................. 15,599
Amortization of organization costs (Note 1)................ 10,300
----------
Total expenses before reductions......................... 2,424,156
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................... (177,376)
Expense reductions -- Global Infrastructure
Portfolio.............................................. (37,549)
----------
Total net expenses....................................... 2,209,231
----------
Net investment loss.......................................... (507,328)
----------
Net realized and unrealized loss on
investments and foreign currencies:
Net realized gain on investments -- Global
Infrastructure Portfolio.................. 1,032,988
Net realized loss on foreign currency
transactions -- Global Infrastructure
Portfolio................................. (1,091,351)
-----------
Net realized loss during the year........................ (58,363)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global
Infrastructure Portfolio.................. 157,236
Net change in unrealized appreciation of
investments -- Global Infrastructure
Portfolio................................. (565,235)
-----------
Net unrealized depreciation during the year.............. (407,999)
----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (466,362)
----------
Net decrease in net assets resulting from operations......... $ (973,690)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 74
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)............... $ (507,328) $ 13,178
Net realized loss on investments and
foreign currency transactions -- Global
Infrastructure Portfolio.................. (58,363) (49,221)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies -- Global
Infrastructure Portfolio.................. 157,236 1,144
Net change in unrealized appreciation of
investments -- Global Infrastructure
Portfolio................................. (565,235) 1,109,668
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (973,690) 1,074,769
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 69,579,771 55,939,368
Decrease from capital shares repurchased... (36,537,085) (2,544,651)
----------------- -----------------
Net increase from capital share
transactions............................ 33,042,686 53,394,717
----------------- -----------------
Total increase in net assets................. 32,068,996 54,469,486
Net assets:
Beginning of period........................ 54,569,486 100,000
----------------- -----------------
End of period.............................. $ 86,638,482 $54,569,486
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 75
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
------------------------------- ------------------------------- -------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF TO
OCTOBER 31, OPERATIONS) TO OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995 OCTOBER 31, 1994 1995 OCTOBER 31, 1994 1995
----------- ------------------ ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 11.43 $ 12.45 $ 11.43 $ 12.00
----------- -------- ----------- -------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03)* 0.01* (0.09)* (0.01)* 0.02*
Net realized and unrealized gain
(loss) on investments................ (0.33) 1.03 (0.33) 1.03 0.12
----------- -------- ----------- -------- -------------
Net increase (decrease) from
investment operations.............. (0.36) 1.04 (0.42) 1.02 0.14
----------- -------- ----------- -------- -------------
Net asset value, end of period.......... $ 12.11 $ 12.47 $ 12.03 $ 12.45 $ 12.14
----------- -------- ----------- -------- -------------
----------- -------- ----------- -------- -------------
Total investment return (c)............. (2.89)% 9.10 %(b) (3.37)% 8.92 %(b) 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 36,241 $ 23,615 $ 50,181 $ 30,954 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... (0.32)% 0.41 %(a) (0.82)% (0.09)%(a) 0.18%(a)
Without expense reductions and
reimbursement by G.T. Capital........ (0.58)% (0.47)%(a) (1.08)% (0.97)%(a) (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 2.36% 2.40 %(a) 2.86% 2.90 %(a) 1.86%(a)
Without expense reductions and
reimbursement by G.T. Capital........ 2.62% 3.28 %(a) 3.12% 3.78 %(a) 2.12%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income per share would have been reduced by $0.03 for Class
A shares, $0.03 for Class B shares, and $0.02 for Advisor Class shares
for the period ended October 31, 1995. Net investment income per share
would have been reduced by $0.02 for Class A and Class B from May 31,
1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 76
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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 initial
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, Class B, and
Advisor Class shares for purchase.
Statement of Additional Information Page 77
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
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, 1995, G.T. Global retained
$67,021 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $193,268. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $5,836 to G.T. Capital.
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 78
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
3. CAPITAL SHARES
At October 31, 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 Financial
Services Fund; and 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
------------------------ ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,997,022 $ 35,715,669 2,020,133 $24,648,202
Shares repurchased......................................................... (1,898,557) (23,075,894) (131,239) (1,614,053)
---------- ------------ --------- -----------
Net increase............................................................... 1,098,465 $ 12,639,775 1,888,894 $23,034,149
---------- ------------ --------- -----------
---------- ------------ --------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
------------------------ ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,815,712 $ 33,606,616 2,557,551 $31,291,166
Shares repurchased......................................................... (1,130,463) (13,421,180) (75,739) (930,598)
---------- ------------ --------- -----------
Net increase............................................................... 1,685,249 $ 20,185,436 2,481,812 $30,360,568
---------- ------------ --------- -----------
---------- ------------ --------- -----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
------------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 21,018 $ 257,486
Shares repurchased......................................................... (3,199) (40,011)
---------- ------------
Net increase............................................................... 17,819 $ 217,475
---------- ------------
---------- ------------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 79
<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 portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets and the supplementary data for the year then
ended and 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
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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Infrastructure Portfolio as of October 31, 1995, the results of its operations
for the year then ended, the changes in its net assets and the supplementary
data for the year then ended and 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 15, 1995
Statement of Additional Information Page 80
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (27.3%)
Consolidated Electric Power Asia .......................... HK 1,400,000 $ 2,833,971 3.3
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp.: ............................... KOR -- -- 2.8
ELECTRICAL & GAS UTILITIES
ADR-/- {\/} ............................................. -- 58,000 1,435,500 --
Common-/- ............................................... -- 21,000 938,083 --
ASEA AB "B" Free ......................................... SWDN 22,000 2,172,307 2.5
ELECTRICAL PLANT/EQUIPMENT
Enron Global Power & Pipelines L.L.C. ..................... US 90,000 2,171,250 2.5
ENERGY EQUIPMENT & SERVICES
Empresa Nacional de Electridad S.A. - ADR{\/} ............. SPN 40,000 2,010,000 2.3
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{\/} ............... BOL 62,300 1,814,488 2.1
ELECTRICAL & GAS UTILITIES
Edison S.p.A. ............................................. ITLY 450,000 1,811,527 2.1
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} .................................. CHLE 75,000 1,800,000 2.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR-/- {\/
} ....................................................... BRZL 81,175 1,735,116 2.0
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ............... ASTRI 14,000 1,711,284 2.0
ELECTRICAL & GAS UTILITIES
Capex S.A. ................................................ ARG 260,000 1,677,000 2.0
ELECTRICAL & GAS UTILITIES
MetroGas S.A. - ADR{\/} ................................... ARG 100,000 850,000 1.0
ENERGY EQUIPMENT & SERVICES
AES China Generating Co., Ltd. "A"-/- ..................... US 54,100 541,000 0.6
ELECTRICAL & GAS UTILITIES
------------
23,501,526
------------
Services (20.7%)
ABC Rail Products Corp.-/- ................................ US 115,100 2,560,975 3.0
TRANSPORTATION - ROAD & RAIL
DDI Corp. ................................................. JPN 295 2,392,672 2.8
WIRELESS COMMUNICATIONS
Telefonica de Espana - ADR{\/} ............................ SPN 55,000 2,069,375 2.4
TELEPHONE NETWORKS
SPT Telecom-/- ........................................... CZCH 19,000 1,871,295 2.2
TELEPHONE NETWORKS
WorldCom, Inc.-/- ......................................... US 55,832 1,821,519 2.1
TELEPHONE - LONG DISTANCE
Stet Di Risp .............................................. ITLY 810,000 1,768,188 2.1
TELEPHONE NETWORKS
PT Indonesia Satellite (Indosat) - ADR{\/} ................ INDO 50,000 1,656,250 1.9
TELEPHONE - LONG DISTANCE
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 20,000 1,122,500 1.3
TELEPHONE NETWORKS
Centennial Cellular Corp. "A"-/- .......................... US 60,000 1,095,000 1.3
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 81
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Pakistan Telecommunications Co., Ltd.: .................... PAK -- -- 0.8
TELEPHONE NETWORKS
144A GDR{.} -/- {\/} ................................... -- 4,892 $ 457,402 --
New Voucher-/- {\/} ..................................... -- 2,800 273,324 --
RailTex, Inc.-/- .......................................... US 22,200 460,650 0.5
TRANSPORTATION - ROAD & RAIL
PST Vans, Inc.-/- ......................................... US 47,500 267,188 0.3
TRANSPORTATION - ROAD & RAIL
Telecomunicacoes Brasileiras S.A. (Telebras) - 144A ADR{.}
{\/ } ................................................... BRZL 113 4,506 --
TELEPHONE NETWORKS
------------
17,820,844
------------
Capital Goods (20.7%)
Nokia AB Preferred - ADR{\/} .............................. FIN 51,000 2,843,250 3.3
TELECOM EQUIPMENT
Mannesmann AG ............................................. GER 7,500 2,469,090 2.9
MACHINERY & ENGINEERING
Caterpillar, Inc. ......................................... US 40,000 2,245,000 2.6
MACHINERY & ENGINEERING
Fluor Corp. ............................................... US 35,000 1,977,500 2.3
CONSTRUCTION
United Engineers Ltd. .................................... MAL 270,000 1,679,197 2.0
CONSTRUCTION
Allgon AB "B" Free ........................................ SWDN 100,000 1,515,037 1.8
TELECOM EQUIPMENT
Acme-Cleveland Corp. ..................................... US 63,300 1,384,688 1.6
MACHINE TOOLS
E.R.G. Ltd. .............................................. AUSL 1,100,000 1,331,861 1.5
MULTI-INDUSTRY
BroadBand Technologies, Inc.-/- ........................... US 70,100 1,226,750 1.4
TELECOM EQUIPMENT
C & P Homes, Inc.-/- ...................................... PHIL 998,200 643,566 0.7
CONSTRUCTION
Champion Technology Holdings .............................. HK 3,878,622 496,668 0.6
TELECOM EQUIPMENT
------------
17,812,607
------------
Materials/Basic Industry (15.0%)
La Cementos Nacional, C.A. - 144A GDR{.} -/- {\/} ......... ECDR 12,060 2,412,000 2.8
CEMENT
PT Bakrie and Brothers .................................... INDO 1,170,000 2,061,674 2.4
BUILDING MATERIALS & COMPONENTS
Lone Star Industries, Inc. ................................ US 75,000 1,715,625 2.0
CEMENT
Giant Cement Holding, Inc.-/- ............................. US 179,800 1,685,625 2.0
CEMENT
Siam Cement Co., Ltd. - Foreign ........................... THAI 28,000 1,526,868 1.8
CEMENT
Hylsamex, S.A. de C.V. - 144A ADR{.} -/- {\/} ............. MEX 75,000 1,265,625 1.5
METALS - STEEL
Cementos Paz del Rio S.A. - 144A ADR{.} -/- {\/} .......... COL 65,000 926,250 1.1
CEMENT
PT Semen Cibinong - Foreign ............................... INDO 316,000 828,282 1.0
CEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Grupo Simec, S.A. de C.V. - ADR-/- {\/} ................... MEX 54,200 $ 352,300 0.4
METALS - STEEL
------------
12,774,249
------------
Technology (9.3%)
DSP Communications, Inc. .................................. US 110,000 3,987,500 4.6
TELECOM TECHNOLOGY
LG Information & Communication-/- ......................... KOR 30,400 2,423,735 2.8
TELECOM TECHNOLOGY
Three-Five Systems, Inc.-/- .............................. US 90,000 1,631,249 1.9
TELECOM TECHNOLOGY
------------
8,042,484
------------
Miscellaneous (2.2%)
General Electric Co. ...................................... US 30,000 1,897,500 2.2
CONGLOMERATE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $81,114,777) ................. 81,849,210 95.2
------------ -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.9%)
Philippines (0.9%)
International Container Terminal Services, Convertible
Bond, 5% due 9/15/01 - 144A (cost $1,000,000){.} ....... USD 1,000,000 810,000 0.9
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $3,235,000 U.S. Treasury Bill, due
2/8/96 (market value of collateral is $3,187,283,
including accrued interest). (cost $3,116,502) .......... 3,116,502 3.6
------------ -----
TOTAL INVESTMENTS (cost $85,231,279) ........................ 85,775,712 99.7
Other Assets and Liabilities ................................ 234,216 0.3
------------ -----
NET ASSETS .................................................. $ 86,009,928 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $86,009,928.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} 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.
* For Federal income tax purposes, cost is $85,381,279 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 8,629,590
Unrealized depreciation: (8,235,157)
-------------
Net unrealized appreciation: $ 394,433
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Short-Term
Country(Country Code/Currency Code) Equity Fixed Income & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 3.0 3.0
Australia (AUSL/AUD) ................. 1.5 1.5
Austria (ASTRI/ATS) .................. 2.0 2.0
Bolivia (BOL/BOL) .................... 2.1 2.1
Brazil (BRZL/BRL) .................... 2.0 2.0
Chile (CHLE/CLP) ..................... 2.1 2.1
Colombia (COL/COP) ................... 1.1 1.1
Czech Republic (CZCH/CSK) ........... 2.2 2.2
Ecuador (ECDR/ECS) .................. 2.8 2.8
Finland (FIN/FIM) .................... 3.3 3.3
Germany (GER/DEM) .................... 2.9 2.9
Hong Kong (HK/HKD) ................... 3.9 3.9
Indonesia (INDO/IDR) ................. 5.3 5.3
Italy (ITLY/ITL) ..................... 4.2 4.2
Japan (JPN/JPY) ...................... 2.8 2.8
Korea (KOR/KRW) ...................... 5.6 5.6
Malaysia (MAL/MYR) ................... 2.0 2.0
Mexico (MEX/MXN) ..................... 1.9 1.9
Pakistan (PAK/PKR) .................. 0.8 0.8
Philippines (PHIL/PHP) ............... 2.0 0.9 2.9
Spain (SPN/ESP) ...................... 4.7 4.7
Sweden (SWDN/SEK) .................... 4.3 4.3
Thailand (THAI/THB) .................. 1.8 1.8
United States (US/USD) ............... 30.9 3.9 34.8
------ --- --- -----
Total ............................... 95.2 0.9 3.9 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $86,009,928.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Delivery Appreciation
Contracts to Buy Dollars) Contract Price Date (Depreciation)
- ------------------------------------------------------------------------- ------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks........................................................... 852,697 1.42567 11/03/95 $ 10,987
Japanese Yen............................................................. 215,243 100.01800 11/14/95 (4,717)
Japanese Yen............................................................. 25,438 97.97301 11/14/95 (1,100)
------------- -------------
Total Contracts to Buy (Payable amount $1,088,208)....................... 1,093,378 5,170
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 1.27%
Contracts to Sell
- -------------------------------------------------------------------------
Deutsche Marks........................................................... 1,811,980 1.37700 11/03/95 39,872
Deutsche Marks........................................................... 177,898 1.45648 11/30/95 (6,251)
Italian Lira............................................................. 1,341,741 1,605.60000 11/16/95 (10,500)
Japanese Yen............................................................. 978,378 91.70000 11/14/95 112,135
Japanese Yen............................................................. 303,297 96.50400 11/14/95 17,933
------------- -------------
Total Contracts to Sell (Receivable amount $4,766,483)................... 4,613,294 153,189
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 5.36%
Total Open Forward Foreign currency Contracts, Net....................... $ 158,359
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $85,231,279)
(Note 1)............................................... $85,775,712
U.S. currency.............................. $ 499 --
Foreign currencies (cost $472,653)......... 472,692 473,191
--------
Receivable for open forward foreign currency contracts,
net (Note 1)........................................... 158,359
Dividends and dividend withholding tax reclaims
receivable............................................. 119,634
Receivable for forward foreign currency contracts --
closed (Note 1)........................................ 15,177
Interest receivable..................................... 6,389
Prepaid expenses........................................ 234
Cash held as collateral for securities loaned (Note
1)..................................................... 7,441,675
-----------
Total assets.......................................... 93,990,371
-----------
Liabilities:
Payable for investment management and administration
fees (Note 2).......................................... 505,838
Payable for professional fees........................... 14,114
Payable for custodian fees (Note 1)..................... 6,534
Payable for printing and postage expenses............... 4,250
Payable for Trustees' fees and expenses (Note 2)........ 3,992
Other accrued expenses.................................. 4,040
Collateral for securities loaned (Note 1)............... 7,441,675
-----------
Total liabilities..................................... 7,980,443
-----------
Net assets................................................ $86,009,928
-----------
-----------
Net assets consist of:
Paid in capital......................................... $84,277,905
Accumulated net investment income....................... 1,136,794
Accumulated net realized loss on investments and foreign
currency transactions.................................. (107,584)
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies...................... 158,380
Net unrealized appreciation of investments.............. 544,433
-----------
Total -- representing net assets applicable to shares of
beneficial interest outstanding.......................... $86,009,928
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 85
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$90,378).................................................. $1,008,999
Interest income............................................ 692,904
----------
Total investment income.................................. 1,701,903
----------
Expenses:
Investment management and administration fees (Note 2)..... 601,421
Custodian fees (Note 1).................................... 80,701
Legal fees................................................. 18,300
Audit fees................................................. 11,550
Trustees' fees and expenses (Note 2)....................... 7,300
Printing and postage expenses.............................. 4,250
Other expenses............................................. 3,650
----------
Total expenses before reductions......................... 727,172
----------
Expense reductions (Notes 1 & 4)....................... (37,549)
----------
Total net expenses....................................... 689,623
----------
Net investment income........................................ 1,012,280
----------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... $ 1,032,988
Net realized loss on foreign currency
transactions.............................. (1,091,351)
-----------
Net realized loss during the year........................ (58,363)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies..................... 157,236
Net change in unrealized appreciation of
investments............................... (565,235)
-----------
Net unrealized depreciation during the year.............. (407,999)
----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (466,362)
----------
Net increase in net assets resulting from operations......... $ 545,918
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 86
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................... $ 1,012,280 $ 124,514
Net realized loss on investments and
foreign currency transactions............. (58,363) (49,221)
Net change in unrealized appreciation on
translation of assets and
liabilities in foreign currencies......... 157,236 1,144
Net change in unrealized appreciation of
investments............................... (565,235) 1,109,668
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 545,918 1,186,105
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 62,352,320 52,494,964
Withdrawals................................ (27,995,100) (2,674,379)
----------------- -----------------
Net increase from beneficial interest
transactions............................ 34,357,220 49,820,585
----------------- -----------------
Total increase in net assets................. 34,903,138 51,006,690
Net assets:
Beginning of period........................ 51,106,790 100,100
----------------- -----------------
End of period.............................. $ 86,009,928 $51,106,790
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 87
<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
YEAR ENDED (COMMENCEMENT OF
OCTOBER 31, OPERATIONS) TO
1995 OCTOBER 31, 1994
----------- ------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 86,010 $ 51,107
Ratio of net investment income to
average net assets..................... 1.22% 1.44 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 0.83% 1.17 %(a)
Without expense reductions............ 0.88% -- % *
Portfolio turnover rate................. 45% 18 %
</TABLE>
- ----------------
(a) Annualized.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 88
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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, on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 of
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 year end, resulting from
changes in exchange rates.
(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.
Statement of Additional Information Page 89
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the 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 amounts 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 hold 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 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 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
Statement of Additional Information Page 90
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
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
At October 31, 1995, stocks with an aggregate value of approximately $7,127,333
were on loan to brokers. The loans were secured by cash collateral of
$7,441,675. 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 year ended October 31, 1995, the Portfolio received $29,528 of income from
securities lending which were used to reduce the Portfolio's custodian fees.
(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
infrastructure 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 October 31, 1995, 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 year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$66,417,748 and $32,256,613, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $8,021 under these arrangements.
Statement of Additional Information Page 91
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Natural Resources Fund 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, 1995, related statement of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for the year then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 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 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 Natural Resources Fund as of October 31, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended and 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 15, 1995
Statement of Additional Information Page 92
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Natural Resources Portfolio
(cost $25,952,266) (Note 1)...................... $26,759,884
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 319,110
Unamortized organizational costs (Note 1)......... 36,854
Receivable for Fund shares sold................... 33,663
-----------
Total assets.................................... 27,149,511
-----------
Liabilities:
Payable for Fund shares repurchased............... 302,940
Payable for administration fees (Note 2).......... 74,485
Payable for printing and postage expenses......... 32,910
Payable for professional fees..................... 25,278
Payable for service and distribution expenses
(Note 2)......................................... 18,237
Payable for registration and filing fees.......... 12,148
Payable for transfer agent fees (Note 2).......... 8,635
Payable for Directors' fees and expenses (Note
2)............................................... 752
Payable for fund accounting fees (Note 2)......... 610
Other accrued expenses............................ 2,298
-----------
Total liabilities............................... 478,293
-----------
Net assets.......................................... $26,671,218
-----------
-----------
Class A:
Net asset value and redemption price per share
($12,597,970 DIVIDED BY 1,101,106 shares
outstanding)....................................... $ 11.44
-----------
-----------
Maximum offering price per share
(100/95.25 of $11.44) *............................ $ 12.01
-----------
-----------
Class B:+
Net asset value and offering price per share
($13,978,465 DIVIDED BY 1,230,103 shares
outstanding)....................................... $ 11.36
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share
($94,783 DIVIDED BY 8,267 shares outstanding)...... $ 11.47
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $28,316,783
Undistributed net investment income............... 47,438
Accumulated net realized loss on investments and
foreign currency transactions.................... (2,500,621)
Net unrealized depreciation on translation of
assets and liabilities in foreign
currencies -- Global Natural Resources
Portfolio........................................ (48,503)
Net unrealized appreciation of investments --
Global Natural Resources Portfolio............... 856,121
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $26,671,218
-----------
-----------
<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>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Natural Resources Portfolio...... $ 437,615
Dividend income -- Global Natural Resources Portfolio...... 392,475
-----------
Total investment income.................................. 830,090
-----------
Expenses:
Expenses -- Global Natural Resources Portfolio............. 284,129
Service and distribution expenses: (Note 2)
Class A.................................. $ 73,794
Class B.................................. 149,950 223,744
-----------
Transfer agent fees (Note 2)............................... 141,492
Registration and filing fees............................... 136,100
Printing and postage expenses.............................. 120,650
Administration fees (Note 2)............................... 74,485
Audit fees................................................. 53,750
Legal fees................................................. 44,782
Directors' fees and expenses (Note 2)...................... 12,450
Amortization of organization costs (Note 1)................ 10,300
Fund accounting fees (Note 2).............................. 7,619
Other expenses............................................. 1,251
-----------
Total expenses before reductions......................... 1,110,752
-----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................... (319,110)
Expense reductions -- Global Natural Resources
Portfolio.............................................. (9,670)
-----------
Total net expenses....................................... 781,972
-----------
Net investment income........................................ 48,118
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
Natural Resources Portfolio............... (2,302,171)
Net realized loss on foreign currency
transactions -- Global Natural Resources
Portfolio................................. (89,256)
-----------
Net realized loss during the year........................ (2,391,427)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies -- Global Natural
Resources Portfolio....................... (43,764)
Net change in unrealized appreciation of
investments -- Global Natural Resources
Portfolio................................. 177,530
-----------
Net unrealized appreciation during the year.............. 133,766
-----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (2,257,661)
-----------
Net decrease in net assets resulting from operations......... $(2,209,543)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 94
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 48,118 $ 106,264
Net realized loss on investments and
foreign currency transactions -- Global
Natural Resources Portfolio............... (2,391,427) (130,259)
Net change in unrealized depreciation on
translation of assets and
liabilities in foreign currencies --
Global Natural Resources Portfolio........ (43,764) (4,739)
Net change in unrealized appreciation of
investments -- Global Natural
Resources Portfolio....................... 177,530 678,591
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (2,209,543) 649,857
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (36,529) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (30,368) --
----------------- -----------------
Total distributions...................... (66,897) --
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 38,611,615 34,666,146
Decrease from capital shares repurchased... (37,864,366) (7,215,594)
----------------- -----------------
Net increase from capital share
transactions............................ 747,249 27,450,552
----------------- -----------------
Total increase (decrease) in net assets...... (1,529,191) 28,100,409
Net assets:
Beginning of period........................ 28,200,409 100,000
----------------- -----------------
End of period.............................. $ 26,671,218 $28,200,409
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 95
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
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 ADVISOR
------------------------------- ------------------------------- CLASS+
MAY 31, 1994 MAY 31, 1994 -------------
(COMMENCEMENT OF (COMMENCEMENT OF JUNE 1, 1995
YEAR ENDED OPERATIONS) TO YEAR ENDED OPERATIONS) TO TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994 1995
----------- ------------------ ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.41 $ 11.43 $ 12.38 $ 11.43 $ 11.45
----------- -------- ----------- -------- -------------
Income from investment operations:
Net investment income (loss).......... 0.04* 0.06* (0.02)* 0.03* 0.11*
Net realized and unrealized gain
(loss) on investments................ (0.98) 0.92 (0.98) 0.92 (0.09)
----------- -------- ----------- -------- -------------
Net increase (decrease) from
investment operations.............. (0.94) 0.98 (1.00) 0.95 0.02
----------- -------- ----------- -------- -------------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.02) -- 0.00
----------- -------- ----------- -------- -------------
Total distributions................. (0.03) -- (0.02) -- 0.00
----------- -------- ----------- -------- -------------
Net asset value, end of period.......... $ 11.44 $ 12.41 $ 11.36 $ 12.38 $ 11.47
----------- -------- ----------- -------- -------------
----------- -------- ----------- -------- -------------
Total investment return (c)............. (7.58)% 8.57 %(b) (8.05)% 8.31 %(b) 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 12,598 $ 14,797 $ 13,978 $ 13,404 $ 95
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 0.41% 2.63 %(a) (0.09)% 2.13 %(a) 0.91%(a)
Without expense reductions and
reimbursement from G.T. Capital...... (0.69)% 0.65 %(a) (1.19)% 0.15 %(a) (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 2.37% 2.40 %(a) 2.87% 2.90 %(a) 1.87%(a)
Without expense reductions and
reimbursement from G.T. Capital...... 3.47% 4.38 %(a) 3.97% 4.88 %(a) 2.97%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income (loss) per share would have been affected by $0.14,
$0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively, for the year ended October 31, 1995, and $0.04 for Class
A and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 96
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service distribution expenses, and may differ in its
transfer agent, registration, and certain other class-specific fees and
expenses.
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
$2,547,364, of which $91,443 expires in 2002 and $2,455,921 expires in 2003.
(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 initial
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, Class B, and
Advisor Class shares for purchase.
Statement of Additional Information Page 97
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
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, 1995, G.T. Global retained
$16,516 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $73,935. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $1,931 to G.T. Capital.
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>
GT GLOBAL NATURAL RESOURCES FUND
3. CAPITAL SHARES
At October 31, 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 Financial
Services 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
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
----------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,262,790 $25,998,648 1,647,315 $20,040,497
Shares issued in connection with reinvestment of distributions............. 2,665 30,350 -- --
---------- ----------- --------- -----------
2,265,455 26,028,998 1,647,315 20,040,497
Shares repurchased......................................................... (2,356,872) (27,189,124) (459,166) (5,648,929)
---------- ----------- --------- -----------
Net increase (decrease).................................................... (91,417) $(1,160,126) 1,188,149 $14,391,568
---------- ----------- --------- -----------
---------- ----------- --------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
----------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 1,073,588 $12,447,266 1,205,189 $14,625,649
Shares issued in connection with reinvestment of distributions............. 2,190 24,898 -- --
---------- ----------- --------- -----------
1,075,778 12,472,164 1,205,189 14,625,649
Shares repurchased......................................................... (928,373) (10,660,475) (126,865) (1,566,665)
---------- ----------- --------- -----------
Net increase............................................................... 147,405 $ 1,811,689 1,078,324 $13,058,984
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
-----------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 9,525 $ 110,453
Shares issued in connection with reinvestment of distributions............. -- --
---------- -----------
9,525 110,453
Shares repurchased......................................................... (1,258) (14,767)
---------- -----------
Net increase............................................................... 8,267 $ 95,686
---------- -----------
---------- -----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.," and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.160 per share (representing an approximate total of
$394,789). The total amount of taxes paid by the Fund to such countries was
approximately $0.015 per share (representing an approximate total of $36,734).
Statement of Additional Information Page 99
<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, 1995, the related statement of operations for the year then
ended, the statements of changes in net assets and the supplementary data for
the year then ended and 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 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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Natural Resources Portfolio as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
supplementary data for the year then ended and 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 15, 1995
Statement of Additional Information Page 100
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Oil (31.3%)
Mobil Corp. ............................................... US 11,000 $ 1,108,250 4.1
British Petroleum Co., PLC ................................ UK 150,100 1,103,153 4.1
Saga Petroleum AS "A" ..................................... NOR 85,000 1,064,923 4.0
Reading & Bates Corp.-/- .................................. US 90,000 1,035,000 3.9
Repsol S.A. - ADR{\/} ..................................... SPN 34,900 1,033,913 3.9
Shell Transport & Trading Co., PLC ........................ UK 80,500 940,248 3.5
Anadarko Petroleum Corp. .................................. US 20,000 867,500 3.2
Total Compagnie Francaise des Petroles S.A. - ADR{\/} ..... FR 20,100 620,588 2.3
Norsk Hydro AS ............................................ NOR 15,175 604,485 2.3
------------
8,378,060
------------
Chemicals (12.8%)
Cytec Industries-/- ....................................... US 19,300 1,056,675 3.9
Cabot Corp. ............................................... US 21,000 997,500 3.7
Occidental Petroleum Corp. ................................ US 33,000 709,500 2.6
Potash Corporation of Saskatchewan, Inc.{\/} .............. CAN 10,000 696,250 2.6
------------
3,459,925
------------
Machinery & Engineering (9.5%)
Rauma Oy - ADR-/- {\/} ................................... FIN 45,700 993,975 3.7
Valmet Corp. "A" .......................................... FIN 32,500 903,799 3.4
Harnischfeger Industries, Inc. ........................... US 20,000 630,000 2.4
------------
2,527,774
------------
Metals - Non-Ferrous (8.2%)
Lonrho PLC ................................................ UK 400,000 986,249 3.7
Diamond Fields Resources, Inc.-/- ......................... CAN 42,800 770,962 2.9
PT Tambang Timah - 144A GDR{.} -/- {\/} ................... INDO 37,500 426,375 1.6
------------
2,183,586
------------
Forest Products (7.7%)
James River Corporation of Virginia ....................... US 30,000 963,750 3.6
Asia Pulp & Paper Co., Ltd. - ADR{\/}-/- ................. INDO 59,000 604,750 2.3
St Laurent Paperboard, Inc.-/- ........................... CAN 33,900 490,415 1.8
------------
2,058,915
------------
Metals - Steel (7.1%)
UCAR International, Inc.-/- ............................... US 41,400 1,179,900 4.4
SGL Carbon AG-/- .......................................... GER 10,900 714,894 2.7
------------
1,894,794
------------
Misc. Materials & Components (6.5%)
Broken Hill Proprietary Co., Ltd. ......................... AUSL 56,167 760,470 2.8
Anglovaal Ltd. "N" ........................................ SAFR 17,350 658,981 2.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 101
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Misc. Materials & Components (Continued)
De Beers Centenary AG - Linked Unit ....................... SAFR 11,400 $ 314,973 1.2
------------
1,734,424
------------
Gold (4.8%)
Ashanti Goldfields Co., Ltd. - GDR{\/} ................... SAFR 41,000 722,625 2.7
Acacia Resources Ltd.-/- .................................. AUSL 352,000 576,302 2.1
------------
1,298,927
------------
Food (3.2%)
IBP, Inc. ................................................. US 14,100 844,238 3.2
------------ -----
TOTAL EQUITY INVESTMENTS (cost $23,524,522) ................. 24,380,643 91.1
------------ -----
<CAPTION>
Market
Repurchase Agreement Value
- ------------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $2,820,000 U.S. Treasury Bill, due
10/17/96 (market value of collateral is $2,675,240,
including collateralized accrued interest). (cost
$2,620,422) ............................................. 2,620,422 9.8
------------ -----
TOTAL INVESTMENTS (cost $26,144,944) ........................ 27,001,065 100.9
Other Assets and Liabilities ................................ (241,081) (0.9)
------------ -----
NET ASSETS .................................................. $ 26,759,984 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $26,759,984.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} 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.
* For Federal income tax purposes, cost is $26,144,944 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,790,765
Unrealized depreciation: (934,644)
-------------
Net unrealized appreciation: $ 856,121
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 102
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country (Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 4.9 4.9
Canada (CAN/CAD) ..................... 7.3 7.3
Finland (FIN/FIM) .................... 7.1 7.1
France (FR/FRF) ...................... 2.3 2.3
Germany (GER/DEM) .................... 2.7 2.7
Indonesia (INDO/IDR) ................. 3.9 3.9
Norway (NOR/NOK) ..................... 6.3 6.3
South Africa (SAFR/ZAR/ZAL) .......... 6.4 6.4
Spain (SPN/ESP) ...................... 3.9 3.9
United Kingdom (UK/GBP) .............. 11.3 11.3
United States (US/USD) ............... 35.0 8.9 43.9
------ --- -----
Total ............................... 91.1 8.9 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $26,759,984.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks................................................................ 213,478 1.42407 11/30/95 $ 2,813
Swedish Krona................................................................. 662,756 7.16200 11/22/95 48,403
------------ -------------
Total Contracts to Buy (Payable amount $825,018).......................... 876,234 51,216
------------ -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 3.27%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Deutsche Marks................................................................ 106,739 1.45648 11/30/95 (3,750)
Deutsche Marks................................................................ 284,637 1.46545 11/30/95 (11,683)
French Francs................................................................. 409,069 5.07400 11/20/95 (14,903)
Swedish Krona................................................................. 662,756 7.41800 11/22/95 (69,605)
------------ -------------
Total Contracts to Sell (Receivable amount $1,363,260).................... 1,463,201 (99,941)
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 5.47%
Total Open Forward Foreign Currency Contracts, Net........................ $ (48,725)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 103
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$26,144,944) (Note 1 )........................... $27,001,065
Foreign currencies (cost $1,757).................. 1,771
Dividends and dividend withholding tax reclaims
receivable....................................... 43,460
-----------
Total assets.................................... 27,046,296
-----------
Liabilities:
Payable for investment management and
administration fees (Note 2)..................... 213,856
Payable for open forward foreign currency
contracts, net (Note 1).......................... 48,725
Payable for professional fees..................... 7,553
Payable for printing and postage expenses......... 4,713
Payable for Trustees' fees and expenses (Note
2)............................................... 2,801
Payable for custodian fees (Note 1)............... 2,521
Other accrued expenses............................ 6,143
-----------
Total liabilities............................... 286,312
-----------
Net assets.......................................... $26,759,984
-----------
-----------
Net assets consist of:
Paid in capital................................... $27,781,110
Accumulated net investment income................. 692,942
Accumulated net realized loss on investments and
foreign currency transactions.................... (2,521,686)
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies..... (48,503)
Net unrealized appreciation of investments........ 856,121
-----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $26,759,984
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 104
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................ $ 437,615
Dividend income (net of foreign withholding tax of
$36,734).................................................. 392,475
-----------
Total investment income.................................. 830,090
-----------
Expenses:
Investment management and administration fees (Note 2)..... 213,856
Custodian fees (Note 1).................................... 40,204
Legal fees................................................. 12,300
Audit fees................................................. 8,750
Trustees' fees and expenses (Note 2)....................... 7,119
Other expenses............................................. 1,900
-----------
Total expenses before reductions......................... 284,129
-----------
Expense reductions (Notes 1 & 4)....................... (9,670)
-----------
Total net expenses....................................... 274,459
-----------
Net investment income........................................ 555,631
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $(2,302,171)
Net realized loss on foreign currency
transactions.............................. (89,256)
-----------
Net realized loss during the year........................ (2,391,427)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (43,764)
Net change in unrealized appreciation of
investments............................... 177,530
-----------
Net unrealized appreciation during the year.............. 133,766
-----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (2,257,661)
-----------
Net decrease in net assets resulting from operations......... $(1,702,030)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 105
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 555,631 $ 137,311
Net realized loss on investments and
foreign currency transactions............. (2,391,427) (130,259)
Net change in unrealized depreciation on
translation of assets and
liabilities in foreign currencies......... (43,764) (4,739)
Net change in unrealized appreciation of
investments............................... 177,530 678,591
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (1,702,030) 680,904
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 34,259,648 33,302,836
Withdrawals................................ (32,747,373) (7,134,101)
----------------- -----------------
Net increase from beneficial interest
transactions............................ 1,512,275 26,168,735
----------------- -----------------
Total increase (decrease) in net assets...... (189,755) 26,849,639
Net assets:
Beginning of period........................ 26,949,739 100,100
----------------- -----------------
End of period.............................. $ 26,759,984 $26,949,739
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 106
<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>
YEAR ENDED MAY 31, 1994
OCTOBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO OCTOBER 31, 1994
----------- -----------------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 26,760 $ 26,950
Ratio of net investment income to
average net assets..................... 1.88% 3.47 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 0.93% 2.15 %(a)
Without expense reductions............ 0.96% -- % *
Portfolio turnover rate................. 87% 137 %
</TABLE>
- ----------------
(a) Annualized.
* Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 107
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 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 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 of
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.
(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 Contract") is an agreement between
two parties to buy
Statement of Additional Information Page 108
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
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 amounts 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 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-
Statement of Additional Information Page 109
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
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 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, 1995, the Portfolio received $1,364 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) 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 natural
resources 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 October 31, 1995, 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 year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$20,836,799 and $23,399,771, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $8,306 under these arrangements.
Statement of Additional Information Page 110
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Consumer Products and Services Fund and Board
of Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Consumer Products and Services Fund, one of the funds organized as a
series of G.T. Investment Funds, Inc., as of October 31, 1995, the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period from December 30, 1994 (commencement of
operations) to October 31, 1995. 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 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, 1995 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 Consumer Products and Services Fund as of October 31, 1995, the
results of its operations, the changes in its net assets and the financial
highlights for the period from December 30, 1994 (commencement of operations) to
October 31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 111
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Consumer Products and
Services Portfolio (cost $6,112,921) (Note 1).... $6,502,154
Receivable for Fund shares sold................... 490,612
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 267,192
Unamortized organizational costs (Note 1)......... 42,893
----------
Total assets.................................... 7,302,851
----------
Liabilities:
Payable for organization expenses (Note 1)........ 40,263
Payable for professional fees..................... 25,016
Payable for printing and postage expenses......... 9,758
Payable for service and distribution expenses
(Note 2)......................................... 7,324
Payable for administration fees (Note 2).......... 5,933
Payable for registration and filing fees.......... 4,366
Payable for transfer agent fees (Note 2).......... 3,186
Payable for Directors' fees and expenses (Note
2)............................................... 697
Payable for fund accounting fees (Note 2)......... 123
Other accrued expenses............................ 1,210
----------
Total liabilities............................... 97,876
----------
Net assets.......................................... $7,204,975
----------
----------
Class A:
Net asset value and redemption price per share
($4,082,173 DIVIDED BY 279,721 shares
outstanding)....................................... $ 14.59
----------
----------
Maximum offering price per share
(100/95.25 of $14.59) *............................ $ 15.32
----------
----------
Class B:+
Net asset value and offering price per share
($2,958,974 DIVIDED BY 203,634 shares
outstanding)....................................... $ 14.53
----------
----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share
($163,828 DIVIDED BY 11,194 shares outstanding).... $ 14.64
----------
----------
Net assets consist of:
Paid in capital (Note 3).......................... $6,418,609
Accumulated net realized gain on investments and
foreign currency transactions.................... 397,133
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Consumer Products and Services
Portfolio........................................ 6,921
Net unrealized appreciation of investments --
Global Consumer Products and Services
Portfolio........................................ 382,312
----------
Total -- representing net assets applicable to
capital shares outstanding......................... $7,204,975
----------
----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value 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>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Consumer Products and Services
Portfolio.............................................. $ 37,739
Dividend income -- Global Consumer Products and Services
Portfolio.............................................. 22,144
----------
Total investment income............................... 59,883
----------
Expenses:
Expenses -- Global Consumer Products and Services
Portfolio.............................................. 54,854
Registration and filing fees............................ 101,900
Legal fees.............................................. 39,448
Audit fees.............................................. 31,280
Transfer agent fees (Note 2)............................ 29,425
Printing and postage expenses........................... 28,600
Service and distribution expenses: (Note 2)
Class A.................................. $ 8,002
Class B.................................. 7,388 15,390
--------
Directors' fees and expenses (Note 2)................... 9,520
Amortization of organization costs (Note 1)............. 8,607
Administration fees (Note 2)............................ 5,933
Fund accounting fees (Note 2)........................... 622
Other expenses.......................................... 2,014
----------
Total expenses before reductions...................... 327,593
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................ (267,192)
Expense reductions -- Global Consumer Products and
Services Portfolio.................................. (1,677)
----------
Total net expenses.................................... 58,724
----------
Net investment income..................................... 1,159
----------
Net realized and unrealized gain on
investments and foreign currencies:
Net realized gain on investments -- Global
Consumer Products and Services
Portfolio................................. 402,673
Net realized loss on foreign currency
transactions -- Global Consumer Products
and Services Portfolio.................... (6,699)
--------
Net realized gain during the period................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global Consumer
Products and Services Portfolio........... 6,921
Net change in unrealized appreciation of
investments -- Global Consumer Products
and Services Portfolio.................... 382,312
--------
Net unrealized appreciation during the period......... 389,233
----------
Net realized and unrealized gain on investments and
foreign currencies....................................... 785,207
----------
Net increase in net assets resulting from operations...... $ 786,366
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 113
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
-----------------
<S> <C>
Increase in net assets
Operations:
Net investment income............................. $ 1,159
Net realized gain on investments and foreign
currency transactions -- Global Consumer Products
and Services Portfolio........................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies -- Global Consumer Products and
Services Portfolio............................... 6,921
Net change in unrealized appreciation of
investments -- Global Consumer Products and
Services
Portfolio........................................ 382,312
-----------------
Net increase in net assets resulting from
operations....................................... 786,366
-----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested....................................... 7,649,630
Decrease from capital shares repurchased.......... (1,331,021)
-----------------
Net increase from capital share transactions.... 6,318,609
-----------------
Total increase in net assets........................ 7,104,975
Net assets:
Beginning of period............................... 100,000
-----------------
End of period..................................... $ 7,204,975
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 114
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
------------------------------ ------------------------------ -------------
DECEMBER 30, 1994 DECEMBER 30, 1994 JUNE 1, 1995
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS) TO
TO OCTOBER 31, TO OCTOBER 31, OCTOBER 31,
1995* 1995* 1995*
------------------------------ ------------------------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.43 $ 11.84
------- ------- -------------
Income from investment operations:
Net investment income (loss).......... 0.02** (0.04)** 0.04**
Net realized and unrealized gain on
investments.......................... 3.14 3.14 2.76
------- ------- -------------
Net increase from investment
operations......................... 3.16 3.10 2.80
------- ------- -------------
Net asset value, end of period.......... $ 14.59 $ 14.53 $ 14.64
------- ------- -------------
------- ------- -------------
Total investment return (c)............. 27.65 %(b) 27.12 %(b) 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 4,082 $ 2,959 $ 164
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 0.20 %(a) (0.30)%(a) 0.70%(a)
Without expense reductions and
reimbursement by G.T. Capital........ (11.11)%(a) (11.61)%(a) (10.61)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 2.32 %(a) 2.82 %(a) 1.82%(a)
Without expense reductions and
reimbursement by G.T. Capital........ 13.63 %(a) 14.13 %(a) 13.13%(a)
</TABLE>
- ----------------
(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.
** Before reimbursement by G.T. Capital Management, Inc., net investment
income per share would have been reduced by $1.12, $1.04 and $0.61 for
Class A, Class B, and Advisor Class, respectively.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 115
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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 initial
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with
Statement of Additional Information Page 116
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
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, 1995, G.T. Global retained $3,380 of such sales charges. G.T. Global
also makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the period ended October 31,
1995, G.T. Global collected CDSCs in the amount of $986. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $318 to G.T. Capital.
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>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
3. CAPITAL SHARES
At October 31, 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; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995
-----------------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------- ------------ --------------
<S> <C> <C>
Shares sold......................................... 330,327 $ 4,257,766
Shares repurchased.................................. (54,980) (746,671)
------------ --------------
Net increase........................................ 275,347 $ 3,511,095
------------ --------------
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1995
-------------------
CLASS B SHARES AMOUNT
- ---------------------------------------------------- ------- ----------
<S> <C> <C>
Shares sold......................................... 246,365 $3,239,565
Shares repurchased.................................. (47,105) (579,906)
------- ----------
Net increase........................................ 199,260 $2,659,659
------- ----------
------- ----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF
SHARES) TO OCTOBER
31, 1995
-------------------
ADVISOR CLASS SHARES AMOUNT
- ---------------------------------------------------- ------- ----------
<S> <C> <C>
Shares sold......................................... 11,525 $ 152,299
Shares repurchased.................................. (331) (4,444)
------- ----------
Net increase........................................ 11,194 $ 147,855
------- ----------
------- ----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 118
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global Consumer Products and
Services Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Consumer Products and Services Portfolio, including the portfolio of
investments, as of October 31, 1995, the related statement of operations, the
statement of changes in net assets and supplementary data for the period from
December 30, 1994 (commencement of operations) to October 31, 1995. 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 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, 1995 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
Consumer Products and Services Portfolio as of October 31, 1995, the results of
its operations, the changes in its net assets and the supplementary data for the
period from December 30, 1994 (commencement of operations) to October 31, 1995,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 119
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (36.9%)
Gucci Group - NY Registered Shares{\/} .................... ITLY 9,000 $ 270,000 4.2
TEXTILES & APPAREL
Robert Mondavi Corp. "A"-/- ............................... US 8,400 237,300 3.7
BEVERAGES - ALCOHOLIC
Fila Holding S.p.A. - ADR{\/} ............................. ITLY 5,400 232,875 3.6
TEXTILES & APPAREL
Heineken N.V. ............................................. NETH 1,225 217,361 3.3
BEVERAGES - ALCOHOLIC
Mattel, Inc. .............................................. US 7,000 201,250 3.1
TOYS
Philip Morris Cos., Inc. .................................. US 2,225 188,013 2.9
TOBACCO
Healthy Planet Products, Inc.-/- .......................... US 14,000 171,500 2.6
OTHER CONSUMER GOODS
Noble China-/- ............................................ CAN 50,400 154,290 2.4
BEVERAGES - ALCOHOLIC
St. John Knits, Inc. ...................................... US 3,000 143,625 2.2
TEXTILES & APPAREL
Amway Japan Ltd. - ADR{\/} ................................ JPN 7,500 142,500 2.2
HOUSEHOLD PRODUCTS
De Rigo S.p.A. - ADR{\/} .................................. ITLY 5,000 103,125 1.6
TEXTILES & APPAREL
Seagram Co., Ltd. ......................................... CAN 2,800 101,919 1.6
BEVERAGES - ALCOHOLIC
Gillette Co. ............................................. US 2,000 96,750 1.5
PERSONAL CARE/COSMETICS
Nike, Inc. "B" ............................................ US 1,200 68,100 1.0
TEXTILES & APPAREL
Amway Asia Pacific Ltd.{\/} ............................... HK 1,900 62,225 1.0
HOUSEHOLD PRODUCTS
------------
2,390,833
------------
Services (30.7%)
Safeway, Inc.-/- .......................................... US 4,600 217,350 3.3
RETAILERS-FOOD
Vons Cos., Inc.-/- ........................................ US 8,100 205,538 3.2
RETAILERS-FOOD
Hennes & Mauritz AB "B" Free ............................. SWDN 2,970 194,314 3.0
RETAILERS-APPAREL
Wickes PLC ................................................ UK 94,000 184,969 2.8
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. JPN 3,700 180,638 2.8
RETAILERS-APPAREL
Polygram N.V. - ADR{\/} ................................... NETH 2,900 179,800 2.8
BROADCASTING & PUBLISHING
Emmis Broadcasting Corp. "A"-/- ........................... US 6,400 169,600 2.6
BROADCASTING & PUBLISHING
Tandy Corp. ............................................... US 3,300 162,938 2.5
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 120
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
La Quinta Inns, Inc. ..................................... US 5,900 $ 151,925 2.3
LODGING
Fabri-Centers of America: ................................. US -- -- 2.0
RETAILERS-APPAREL
"A"-/- .................................................. -- 4,900 72,888 --
"B"-/- .................................................. -- 4,900 56,963 --
Aoyama Trading Co., Ltd. ................................. JPN 4,400 118,814 1.8
RETAILERS-APPAREL
Capital Cities/ABC, Inc. .................................. US 900 106,763 1.6
BROADCASTING & PUBLISHING
------------
2,002,500
------------
Consumer Durables (12.3%)
Redman Industries, Inc.-/- ............................... US 8,100 210,600 3.2
HOUSING
Belmont Homes, Inc. ....................................... US 11,500 201,250 3.1
HOUSING
Black & Decker Corp. ...................................... US 5,800 196,475 3.0
APPLIANCES & HOUSEHOLD
Nokia AB Preferred - ADR{\/} .............................. FIN 3,500 195,125 3.0
CONSUMER ELECTRONICS
------------
803,450
------------
Multi Industry/Miscellaneous (3.0%)
Malbak Ltd. ............................................... SAFR 29,000 192,856 3.0
------------
CONGLOMERATE
Health Care (2.9%)
COR Therapeutics, Inc.-/- ................................. US 10,000 103,750 1.6
BIOTECHNOLOGY
Biovail Corporation International-/- ...................... US 2,200 85,250 1.3
PHARMACEUTICALS
------------
189,000
------------
Technology (0.9%)
Brooktree Corp.-/- ........................................ US 5,000 60,000 0.9
COMPUTERS & PERIPHERALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $5,256,327) ................. 5,638,639 86.7
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.8%, collateralized by $1,180,000 U.S. Treasury Bill, due
2/08/96 (market value of collateral is $1,162,595,
including accrued interest). (cost $1,138,183) .......... 1,138,183 17.5
------------ -----
TOTAL INVESTMENTS (cost $6,394,510) ......................... 6,776,822 104.2
Other Assets and Liabilities ................................ (274,568) (4.2)
------------ -----
NET ASSETS .................................................. $ 6,502,254 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $6,502,254.
{\/} U.S. currency denominated.
-/- Non-income producing security.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 121
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<C> <S>
* For Federal income tax purposes, cost is $6,394,510 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 536,510
Unrealized depreciation: (154,198)
-------------
Net unrealized appreciation: $ 382,312
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-----------------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C> <C>
Canada (CAN/CAD) ..................... 4.0 4.0
Finland (FIN/FIM) .................... 3.0 3.0
Hong Kong (HK/HKD) ................... 1.0 1.0
Italy (ITLY/ITL) ..................... 9.4 9.4
Japan (JPN/JPY) ...................... 6.8 6.8
Netherlands (NETH/NLG) ............... 6.1 6.1
South Africa (SAFR/ZAR) .............. 3.0 3.0
Sweden (SWDN/SEK) .................... 3.0 3.0
United Kingdom (UK/GBP) .............. 2.8 2.8
United States (US/USD) ............... 47.6 13.3 60.9
------ --- --- -----
Total ............................... 86.7 13.3 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $6,502,254.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell: Dollars) Price Date Appreciation
------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Japanese Yen.................................................................. 193,549 98.70000 11/24/95 $ 6,451
------------- -------------
Total Contracts to Sell (Receivable amount $200,000)...................... 193,549 6,451
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 2.98%
Total Open Forward Foreign Currency Contracts, Net........................ $ 6,451
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 122
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$5,256,327) (Note 1)............................. $5,638,639
Repurchase agreement, at value and cost (Note
1)............................................... 1,138,183
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 6,451
Dividends receivable.............................. 4,747
----------
Total assets.................................... 6,788,020
----------
Liabilities:
Payable for securities purchased.................. 192,170
Due to custodian.................................. 54,178
Payable for investment management and
administration fees (Note 2)..................... 16,284
Payable for professional fees..................... 8,405
Payable for Trustees' fees and expenses (Note
2)............................................... 6,080
Payable for printing and postage expenses......... 3,200
Payable for custodian fees (Note 1)............... 2,409
Other accrued expenses............................ 3,040
----------
Total liabilities............................... 285,766
----------
Net assets.......................................... $6,502,254
----------
----------
Net assets consist of:
Paid in capital................................... $5,710,341
Accumulated net investment income................. 6,706
Accumulated net realized gain on investments and
foreign currency transactions.................... 395,974
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 6,921
Net unrealized appreciation of investments........ 382,312
----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $6,502,254
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 123
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income......................................... $ 37,739
Dividend income (net of foreign withholding tax of
$525).................................................. 22,144
--------
Total investment income............................... 59,883
--------
Expenses:
Investment management and administration fees (Note
2)..................................................... 16,284
Custodian fees (Note 1)................................. 15,890
Legal fees.............................................. 6,080
Trustees' fees and expenses (Note 2).................... 6,080
Audit fees.............................................. 4,280
Printing and postage expenses........................... 3,200
Other expenses.......................................... 3,040
--------
Total expenses before reductions...................... 54,854
--------
Expense reductions (Notes 1 & 4).................... (1,677)
--------
Total net expenses.................................... 53,177
--------
Net investment income..................................... 6,706
--------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... $402,673
Net realized loss on foreign currency
transactions.............................. (6,699)
--------
Net realized gain during the period................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 6,921
Net change in unrealized appreciation of
investments............................... 382,312
--------
Net unrealized appreciation during the period......... 389,233
--------
Net realized and unrealized gain on investments and
foreign currencies....................................... 785,207
--------
Net increase in net assets resulting from operations...... $791,913
--------
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 124
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
-----------------
<S> <C>
Increase in net assets
Operations:
Net investment income............................. $ 6,706
Net realized gain on investments and foreign
currency transactions............................ 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies....................................... 6,921
Net change in unrealized appreciation of
investments...................................... 382,312
-----------------
Net increase in net assets resulting from
operations....................................... 791,913
-----------------
Beneficial interest transactions:
Contributions..................................... 6,002,349
Withdrawals....................................... (392,108)
-----------------
Net increase from beneficial interest
transactions................................... 5,610,241
-----------------
Total increase in net assets........................ 6,402,154
Net assets:
Beginning of period............................... 100,100
-----------------
End of period..................................... $6,502,254
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 125
<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 OCTOBER 31, 1995
------------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 6,502
Ratio of net investment income to
average net assets:.................... 0.30 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 2.37 %(a)
Without expense reductions............ 2.44 %(a)
Portfolio turnover rate................. 240 %(a)
</TABLE>
- ----------------
(a) Annualized.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 126
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 year end, resulting from changes in exchange rates.
(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.
Statement of Additional Information Page 127
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
(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 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.
Statement of Additional Information Page 128
<PAGE>
GLOBAL CONSUMER PRODUCTS AND 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 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
October 31, 1995, there were no securities on loan to brokers. For the period
ended October 31, 1995, the Fund received fees of $107 which were used to reduce
the Fund's custodian fees.
(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 October 31, 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 October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$8,990,298 and $4,141,883, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the period ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the period ended October 31, 1995, the
Portfolio's expenses were reduced by $1,570 under these arrangements.
Statement of Additional Information Page 129
<PAGE>
GT GLOBAL HEALTH CARE FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Health Care Fund
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, 1995, 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, 1995 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, 1995, 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 15, 1995
Statement of Additional Information Page 130
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Pharmaceuticals (38.8%)
Eli Lilly & Co. ........................................... US 200,000 $ 19,325,000 3.9
Roche Holdings AG Genusscheine ............................ SWTZ 2,500 18,173,407 3.7
Merck & Co., Inc. ......................................... US 300,000 17,250,000 3.5
Sandoz AG - Registered .................................... SWTZ 15,000 12,384,351 2.5
Bayer AG ................................................. GER 45,000 11,971,861 2.4
Pfizer, Inc. .............................................. US 200,000 11,475,000 2.3
American Home Products Corp. .............................. US 100,000 8,862,500 1.8
Elan Corp., PLC - ADR-/- {\/} ............................. IRE 200,000 8,025,000 1.6
Sanofi S.A. ............................................... FR 110,000 7,018,308 1.4
Warner-Lambert Co. ........................................ US 80,000 6,810,000 1.4
Ethical Holdings PLC - ADR{::} -/- {\/} ................... UK 730,000 6,478,750 1.3
Ares-Serono Group "B" ..................................... SWTZ 9,220 6,052,428 1.2
Takeda Chemical Industries ................................ JPN 400,000 5,635,456 1.1
Schering-Plough Corp. ..................................... US 100,000 5,362,500 1.1
SmithKline Beecham PLC - ADR Units{\/} .................... UK 100,000 5,187,500 1.0
Upjohn Co. ................................................ US 100,000 5,075,000 1.0
Sankyo Co., Ltd. .......................................... JPN 220,000 4,842,970 1.0
Allergan, Inc. ............................................ US 160,000 4,700,000 0.9
R.P. Scherer Corp.-/- ..................................... US 100,000 4,450,000 0.9
Astra AB "B" Free ......................................... SWDN 120,000 4,341,599 0.9
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 100,000 3,925,000 0.8
Roussel-Uclaf ............................................. FR 20,000 3,281,170 0.7
Santen Pharmaceutical ..................................... JPN 120,000 2,841,209 0.6
Pharmacia Aktiebolag - ADR{\/} ............................ SWDN 75,000 2,625,000 0.5
Advanced Therapeutic Systems-/- ........................... US 77,400 2,138,175 0.4
Merck KGaA-/- ............................................. GER 50,000 2,089,107 0.4
Dura Pharmaceuticals, Inc.-/- ............................. US 60,000 1,755,000 0.4
Therapeutic Discovery Corp. Units-/- ...................... US 100,000 675,000 0.1
------------
192,751,291
------------
Health Care Services (24.0%)
Pacificare Health Systems Inc.: ........................... US -- -- 5.4
"B"-/- .................................................. -- 275,000 20,006,250 --
"A"-/- .................................................. -- 100,000 7,050,000 --
United Healthcare Corp. ................................... US 200,000 10,625,000 2.1
Health Management Associates, Inc. "A"-/- ................. US 375,000 8,062,500 1.6
Columbia/HCA Healthcare Corp. ............................. US 150,000 7,368,750 1.5
Health Systems International, Inc. "A"-/- ................. US 200,000 6,075,000 1.2
Health Care & Retirement Corp.-/- ......................... US 200,000 5,875,000 1.2
Vencor, Inc.-/- ........................................... US 200,000 5,550,000 1.1
FHP International Corp.-/- ................................ US 200,000 4,850,000 1.0
HealthCare COMPARE Corp.-/- .............................. US 125,000 4,625,000 0.9
HEALTHSOUTH Corp.-/- ...................................... US 130,000 3,396,250 0.7
Coventry Corp.-/- ......................................... US 165,000 3,238,125 0.7
Wellpoint Health Networks, Inc. "A"-/- .................... US 100,000 3,050,000 0.6
Physician Reliance Network, Inc.-/- ....................... US 85,000 2,826,250 0.6
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 131
<PAGE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care Services (Continued)
Lincare Holdings, Inc.-/- ................................. US 99,000 $ 2,462,625 0.5
Apria Healthcare Group, Inc.-/- ........................... US 100,000 2,162,500 0.4
Humana, Inc.-/- ........................................... US 100,000 2,112,500 0.4
Total Renal Care Holdings, Inc.-/- ........................ US 100,000 2,037,500 0.4
Horizon/CMS Healthcare Corp.-/- ........................... US 100,000 2,025,000 0.4
Multicare Companies, Inc.-/- .............................. US 100,000 1,875,000 0.4
Cerner Corp.-/- ........................................... US 70,000 1,855,000 0.4
Owen Healthcare, Inc. .................................... US 100,000 1,825,000 0.4
Inphynet Medical Management, Inc.-/- ...................... US 100,000 1,800,000 0.4
Physicians Health Services, Inc. "A"-/- ................... US 50,000 1,662,500 0.3
Community Health Systems, Inc.-/- ......................... US 50,000 1,587,500 0.3
GranCare, Inc.-/- ........................................ US 100,000 1,462,500 0.3
Genesis Health Ventures, Inc.-/- .......................... US 44,600 1,287,825 0.3
Bergen Brunswig Corp. "A" ................................. US 50,000 1,037,500 0.2
Coastal Physician Group, Inc.-/- .......................... US 62,300 817,688 0.2
Physician Corporation of America-/- ....................... US 20,000 307,500 0.1
------------
118,916,263
------------
Medical Technology & Supplies (23.6%)
Medtronic, Inc. ........................................... US 425,000 24,543,750 4.9
Cordis Corp.-/- ........................................... US 200,000 22,100,000 4.4
Johnson & Johnson ......................................... US 225,000 18,337,500 3.7
Boston Scientific Corp.-/- ................................ US 200,000 8,425,000 1.7
Nellcor, Inc.-/- .......................................... US 128,000 7,360,000 1.5
Becton, Dickinson & Co. ................................... US 100,000 6,500,000 1.3
Target Therapeutics, Inc.-/- .............................. US 80,000 6,200,000 1.3
Fresenius AG Preferred .................................... GER 6,975 5,575,837 1.1
Amersham International PLC ................................ UK 300,000 4,556,662 0.9
MediSense, Inc.-/- ........................................ US 100,000 2,137,500 0.4
Orthologic Corp.-/- ....................................... US 200,000 1,925,000 0.4
St. Jude Medical, Inc.-/- ................................. US 30,000 1,597,500 0.3
TECNOL Medical Products, Inc.-/- .......................... US 75,000 1,425,000 0.3
Mentor Corp. .............................................. US 60,000 1,320,000 0.3
Sonus Pharmaceuticals, Inc.-/- ........................... US 150,000 1,200,000 0.2
Angeion Corp.-/- .......................................... US 150,000 1,143,750 0.2
Anesta Corp.-/- .......................................... US 100,000 1,062,500 0.2
ATS Medical, Inc.-/- ...................................... US 125,000 984,375 0.2
Maxxim Medical, Inc.-/- ................................... US 45,000 624,375 0.1
KeraVision, Inc.-/- ....................................... US 40,000 495,000 0.1
Molecular Dynamics, Inc.-/- ............................... US 80,000 480,000 0.1
------------
117,993,749
------------
Biotechnology (8.0%)
Amgen, Inc.-/- ............................................ US 300,000 14,400,000 2.9
Genzyme Corp.: ............................................ US -- -- 1.3
General Division-/- ..................................... -- 100,000 5,825,000 --
Tissue Repair Division-/- ............................... -- 13,499 241,295 --
Metra Biosystems, Inc.-/- ................................. US 200,000 3,700,000 0.7
Protein Design Labs, Inc.-/- .............................. US 200,000 3,350,000 0.7
COR Therapeutics, Inc.-/- ................................. US 300,000 3,112,500 0.6
Biochem Pharma, Inc.-/- .................................. CAN 70,000 2,677,500 0.5
Matrix Pharmaceutical, Inc.-/- ........................... US 100,000 1,450,000 0.3
Somatix Therapy Corp.-/- .................................. US 250,000 1,218,750 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 132
<PAGE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Biotechnology (Continued)
Gilead Sciences, Inc.-/- .................................. US 50,000 $ 975,000 0.2
Neurex Corp.-/- ........................................... US 200,000 950,000 0.2
Univax Biologics, Inc.-/- ................................. US 100,000 631,250 0.1
Alpha-Beta Technology, Inc.-/- ............................ US 80,000 610,000 0.1
Ribi ImmunoChem Research, Inc.-/- ......................... US 100,000 450,000 0.1
Liposome Co., Inc. Convertible Preferred "A"-/- ........... US 10,000 310,000 0.1
Enzon, Inc. Preferred ..................................... US 16,000 105,000 --
------------
40,006,295
------------ -----
TOTAL EQUITY INVESTMENTS (cost $354,468,534) ................ 469,667,598 94.4
------------ -----
<CAPTION>
No. of Market % of Net
Warrants Country Warrants Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Elan Corp. - ADR Warrants, expire 8/12/98-/- .............. US 77,400 1,122,300 0.2
PHARMACEUTICALS
ATS Medical Inc. Warrants, expire 3/2/97-/- ............... US 125,000 78,125 --
MEDICAL TECHNOLOGY & SUPPLIES
------------ -----
TOTAL WARRANTS (cost $864,953) .............................. 1,200,425 0.2
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995 for an effective yield of
5.80% collateralized by $52,180,000 U.S. Treasury Strips
due 2/15/02 (market value of collateral is $36,112,125,
including accrued interest). (cost $34,975,634) ......... 34,975,634 7.0
------------ -----
TOTAL INVESTMENTS (cost $390,309,121) ...................... 505,843,657 101.6
Other Assets and Liabilities ................................ (8,184,630) (1.6)
------------ -----
NET ASSETS .................................................. $497,659,027 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $497,659,027.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{::} See Note 5 of Notes to Financial Statements.
{F} The principal amount should be read as units.
* For Federal income tax purposes, cost is $390,841,738 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 122,972,190
Unrealized depreciation: (7,970,271)
-------------
Net unrealized appreciation: $ 115,001,919
-------------
-------------
Abbreviation:
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 133
<PAGE>
GT GLOBAL HEALTH CARE FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Canada (CAN/CAD) ..................... 0.5 0.5
France (FR/FRF) ...................... 2.1 2.1
Germany (GER/DEM) .................... 3.9 3.9
Ireland (IRE/IEP) .................... 1.6 1.6
Israel (ISRL/ILS) .................... 0.8 0.8
Japan (JPN/JPY) ...................... 2.7 2.7
Sweden (SWDN/SEK) .................... 1.4 1.4
Switzerland (SWTZ/CHF) ............... 7.4 7.4
United Kingdom (UK/GBP) .............. 3.2 3.2
United States (US/USD) ............... 70.8 0.2 5.4 76.4
------ --- --- -----
Total ............................... 94.4 0.2 5.4 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $497,659,027.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ---------------------------------------------------------------------------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.............................................................. 1,778,980 1.42407 11/30/95 23,448
Japanese Yen................................................................ 1,237,648 97.97200 11/14/95 $ (53,537)
Japanese Yen................................................................ 753,351 100.01800 11/14/95 (16,512)
Japanese Yen................................................................ 1,029,516 99.87500 11/24/95 (21,798)
------------- -------------
Total Contracts to Buy (Payable amount $4,867,894)........................ 4,799,495 (68,399)
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS .96%
Contracts to Sell:
Deutsche Marks.............................................................. 1,279,045 1.37700 11/03/95 28,145
Deutsche Marks.............................................................. 2,561,731 1.45648 11/30/95 (90,009)
French Francs............................................................... 1,935,154 4.81600 11/06/95 29,132
Japanese Yen................................................................ 2,152,431 91.70000 11/14/95 246,696
Japanese Yen................................................................ 3,815,674 92.70000 11/14/95 391,446
Japanese Yen................................................................ 1,907,837 96.50400 11/14/95 112,805
Japanese Yen................................................................ 1,029,516 95.10240 11/24/95 74,557
Japanese Yen................................................................ 2,456,978 96.52300 11/30/95 133,078
------------- -------------
Total Contracts to Sell (Receivable amount $18,064,216)................... 17,138,366 925,850
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 3.44%
Total Open Forward Foreign Currency Contracts, Net........................ $ 857,451
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 134
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$390,309,121) (Note 1)........................... $505,843,657
Foreign currencies (cost $5,466,965).............. 5,461,800
Receivable for securities sold.................... 13,966,323
Receivable for Fund shares sold................... 3,110,272
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 857,451
Dividends and dividend withholding tax reclaims
receivable....................................... 232,677
Cash held as collateral for securities loaned
(Note 1)......................................... 24,944,125
------------
Total assets.................................... 554,416,305
------------
Liabilities:
Payable for Fund shares repurchased (Note 2)...... 25,896,723
Payable for securities purchased.................. 3,974,762
Payable for forward foreign currency contracts --
closed (Note 1).................................. 968,248
Payable for investment management and
administration fees (Note 2)..................... 416,830
Payable for service and distribution expenses
(Note 2)......................................... 242,109
Payable for transfer agent fees (Note 2).......... 124,655
Payable for printing and postage expenses......... 64,476
Payable for professional fees..................... 34,148
Payable for registration and filing fees.......... 25,618
Payable for custodian fees (Note 1)............... 14,291
Payable for fund accounting fees (Note 2)......... 10,782
Payable for Directors' fees and expenses (Note
2)............................................... 1,229
Other accrued expenses............................ 39,282
Collateral for securities loaned (Note 1)......... 24,944,125
------------
Total liabilities............................... 56,757,278
------------
Net assets.......................................... $497,659,027
------------
------------
Class A:
Net asset value and redemption price per share
($426,380,030 DIVIDED BY 19,527,021 shares
outstanding)....................................... $ 21.84
------------
------------
Maximum offering price per share
(100/95.25 of $21.84) *............................ $ 22.93
------------
------------
Class B:+
Net asset value and offering price per share
($70,739,602 DIVIDED BY 3,280,666 shares
outstanding)....................................... $ 21.56
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and
redemption price per share
($539,395 DIVIDED BY 24,658 shares outstanding).... $ 21.88
------------
------------
Net assets consist of:
Paid in capital................................... $317,402,692
Accumulated net realized gain on investments and
foreign currency transactions.................... 63,862,315
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 859,484
Net unrealized appreciation of investments........ 115,534,536
------------
Total -- representing net assets applicable to
capital shares outstanding......................... $497,659,027
------------
------------
<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 135
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$137,619)................................................. $ 3,781,268
Interest income............................................ 1,320,732
Other income............................................... 99,687
-----------
Total investment income.................................. 5,201,687
-----------
Expenses:
Investment management and administration fees (Note 2)..... 4,453,857
Service and distribution expenses: (Note 2)
Class A.................................. $ 2,021,331
Class B.................................. 523,545 2,544,876
-----------
Transfer agent fees (Note 2)............................... 1,365,000
Printing and postage expenses.............................. 185,925
Custodian fees (Note 1).................................... 128,144
Fund accounting fees (Note 2).............................. 116,877
Registration and filing fees............................... 71,223
Audit fees................................................. 51,100
Legal fees................................................. 38,150
Directors' fees and expenses (Note 2)...................... 10,950
Insurance expenses......................................... 5,377
Other expenses............................................. 20,000
-----------
Total expenses before reductions......................... 8,991,479
-----------
Expense reductions (Notes 1 & 6)....................... (259,926)
-----------
Total net expenses....................................... 8,731,553
-----------
Net investment loss.......................................... (3,529,866)
-----------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 71,316,381
Net realized loss on foreign currency
transactions.............................. (4,272,875)
-----------
Net realized gain during the year........................ 67,043,506
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign
currencies................................ 961,568
Net change in unrealized appreciation of
investments............................... 19,234,934
-----------
Net unrealized appreciation during the year.............. 20,196,502
-----------
Net realized and unrealized gain on investments and foreign
currencies.................................................. 87,240,008
-----------
Net increase in net assets resulting from operations......... $83,710,142
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 136
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment loss........................ $ (3,529,866) $ (5,648,191)
Net realized gain on investments and
foreign currency transactions............. 67,043,506 57,958,127
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... 961,568 (2,695,118)
Net change in unrealized appreciation
(depreciation) of investments............. 19,234,934 (4,582,027)
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 83,710,142 45,032,791
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (27,521,553) --
In excess of net realized gain on
investments............................... -- (1,492,549)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (2,846,079) --
In excess of net realized gain on
investments............................... -- (28,033)
----------------- -----------------
Total distributions...................... (30,367,632) (1,520,582)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,635,173,338 785,204,559
Decrease from capital shares repurchased... (1,668,897,114) (820,493,437)
----------------- -----------------
Net decrease from capital share
transactions............................ (33,723,776) (35,288,878)
----------------- -----------------
Total increase in net assets................. 19,618,734 8,223,331
Net assets:
Beginning of year.......................... 478,040,293 469,816,962
----------------- -----------------
End of year................................ $ 497,659,027 $ 478,040,293
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 137
<PAGE>
GT GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------
1995 1994(D) 1993(D) 1992 1991
---------- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83
---------- ----------- ----------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.15) (0.22) (0.15) (0.18) 0.03
Net realized and unrealized gain on
investments.......................... 3.73 2.02 0.57 (1.53) 6.78
---------- ----------- ----------- ---------- -----------------
Net increase (decrease) from
investment operations.............. 3.58 1.80 0.42 (1.71) 6.81
---------- ----------- ----------- ---------- -----------------
Distributions to shareholders:
From net investment income............ -- -- -- -- (0.07)
From net realized gain on
investments.......................... (1.34) -- -- (0.14) (0.28)
In excess of net realized gain on
investments.......................... -- (0.06) -- -- --
---------- ----------- ----------- ---------- -----------------
Total distributions................. (1.34) (0.06) -- (0.14) (0.35)
---------- ----------- ----------- ---------- -----------------
Net asset value, end of period.......... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29
---------- ----------- ----------- ---------- -----------------
---------- ----------- ----------- ---------- -----------------
Total investment return (c)............. 19.79% 10.11% 2.4% (8.9)% 54.2%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $426,380 $438,940 $461,113 $655,867 $552,897
Ratio of net investment income (loss) to
average net assets..................... (0.72)% (1.23)% (0.90)% (0.97)% 0.19%
Ratio of expenses to average net assets:
With expense reduction................ 1.85% 1.98% 2.00% 2.05% 2.01%
Without expense reduction............. 1.91% --%* --%* --%* --%*
Portfolio turnover rate++++............. 99% 64% 61% 30% 23%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 138
<PAGE>
GT GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS B++ CLASS+++
----------------------------------------- -------------
APRIL 1, 1993 JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO TO
------------------------ OCTOBER 31, OCTOBER 31,
1995(D) 1994(D) 1993(D) 1995
---------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.46 $ 17.80 $ 15.59 $18.66
---------- ----------- -------------- -------------
Income from investment operations:
Net investment income (loss).......... (0.25) (0.32) (0.14) (0.02)
Net realized and unrealized gain on
investments.......................... 3.69 2.02 2.35 3.24
---------- ----------- -------------- -------------
Net increase (decrease) from
investment operations.............. 3.44 1.70 2.21 3.22
---------- ----------- -------------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- 0.00
From net realized gain on
investments.......................... (1.34) -- -- 0.00
In excess of net realized gain on
investments.......................... -- (0.04) -- 0.00
---------- ----------- -------------- -------------
Total distributions................. (1.34) (0.04) -- 0.00
---------- ----------- -------------- -------------
Net asset value, end of period.......... $ 21.56 $ 19.46 $ 17.80 $21.88
---------- ----------- -------------- -------------
---------- ----------- -------------- -------------
Total investment return (c)............. 19.17% 9.55% 14.2%(a) 17.10%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 70,740 $ 39,100 $ 8,604 $ 539
Ratio of net investment income (loss) to
average net assets..................... (1.22)% (1.73)% (1.40)%(b) (0.22)%(b)
Ratio of expenses to average net assets:
With expense reduction................ 2.35% 2.48% 2.54%(b) 1.35%(b)
Without expense reduction............. 2.41% --%* --%* 1.41%(b)
Portfolio turnover rate++++............. 99% 64% 61% 99%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 139
<PAGE>
GT GLOBAL HEALTH CARE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and 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 earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 140
<PAGE>
GT GLOBAL HEALTH CARE FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." 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 Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 Fund may use options to manage its exposure to the
stock market and to fluctuation in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 141
<PAGE>
GT GLOBAL HEALTH CARE FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $24,415,520
were on loan to brokers. The loans were secured by cash collateral of
$24,944,125. 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, 1995, the Fund received $188,401 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund'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 Fund may focus its investments in certain related health care
industries, subjecting the Fund to greater risk than a fund that is more
diversified.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) 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 securites 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 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
Statement of Additional Information Page 142
<PAGE>
GT GLOBAL HEALTH CARE FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$67,325 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $3,342 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $178,859. 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%, 2.90%, and 1.90% 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $30,660 to G.T. Capital.
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
Statement of Additional Information Page 143
<PAGE>
GT GLOBAL HEALTH CARE FUND
$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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$432,262,470 and $488,668,484, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year.
4. CAPITAL SHARES
At October 31, 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 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; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold................... 78,194,828 $ 1,518,869,435 34,050,013 $ 640,715,739
Shares issued in connection
with reinvestment of
distributions............... 1,197,686 21,103,166 59,903 1,108,216
----------- --------------- ----------- -------------
79,392,514 1,539,972,601 34,109,916 641,823,955
Shares repurchased............ (82,265,383) (1,598,688,749) (37,533,619) (705,605,096)
----------- --------------- ----------- -------------
Net decrease.................. (2,872,869) $ (58,716,148) (3,423,703) $ (63,781,141)
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold................... 4,710,190 $ 92,123,273 7,582,598 $ 143,354,981
Shares issued in connection
with reinvestment of
distributions............... 140,259 2,451,761 1,390 25,623
----------- --------------- ----------- -------------
4,850,449 94,575,034 7,583,988 143,380,604
Shares repurchased............ (3,578,957) $ (70,045,915) (6,058,397) (114,888,341)
----------- --------------- ----------- -------------
Net increase.................. 1,271,492 $ 24,529,119 1,525,591 $ 28,492,263
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
-----------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- ---------------
<S> <C> <C>
Shares sold................... 32,235 $ 625,703
Shares repurchased............ (7,577) (162,450)
----------- ---------------
Net increase.................. 24,658 $ 463,253
----------- ---------------
----------- ---------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $6,478,750,
at value.
Statement of Additional Information Page 144
<PAGE>
GT GLOBAL HEALTH CARE FUND
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $71,525 under these arrangements.
7. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$30,367,632 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 145
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Telecommunications Fund 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 portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended and for the period from 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, 1995 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, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from 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 15, 1995
Statement of Additional Information Page 146
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telecom Equipment (18.8%)
Nokia AB "A" ............................................ FIN 2,452,160 $ 140,430,534 5.7
L.M. Ericsson Telephone Co.: ........................... SWDN -- -- 3.8
ADR{\/} ............................................... -- 3,509,300 74,956,437 --
"B" Free .............................................. -- 871,200 18,518,007 --
ECI Telecommunications Ltd.{\/} ......................... ISRL 3,003,500 57,066,500 2.3
DSC Communications Corp.-/- ............................. US 1,500,000 55,500,000 2.3
ANTEC Corp.{::} -/- ..................................... US 2,068,800 25,601,400 1.0
Mitel Corp.-/- {\/} ..................................... CAN 3,776,000 20,768,000 0.8
Andrew Corp.-/- ......................................... US 465,200 19,654,700 0.8
Spectrian Corp.{::} -/- ................................. US 750,000 16,312,500 0.7
Scientific-Atlanta, Inc. ................................ US 925,000 11,446,875 0.5
Champion Technology Holdings ............................ HK 73,439,163 9,404,073 0.4
BroadBand Technologies, Inc.-/- ......................... US 487,300 8,527,750 0.3
Netas Telekomunik-/- .................................... TRKY 17,820,000 6,166,992 0.2
--------------
464,353,768
--------------
Wireless Communications (16.5%)
DDI Corp. ............................................... JPN 15,049 122,058,712 4.9
Advanced Info. Service - Foreign ........................ THAI 2,386,050 37,934,022 1.5
Shinawatra Computer Company, Ltd.: ...................... THAI -- -- 1.4
Foreign ............................................... -- 1,399,100 34,254,595 --
Local ................................................ -- 31,100 761,431 --
Millicom International Cellular S.A.{::} -/- {\/} ....... LUX 1,057,000 34,881,000 1.4
AirTouch Communications, Inc.-/- ........................ US 1,000,000 28,500,000 1.2
United Communication Industry - Foreign ................. THAI 1,967,800 24,871,240 1.0
Vodafone Group PLC ...................................... UK 5,795,000 23,951,201 1.0
Grupo Iusacell, S.A. de C.V. "L" - ADR-/- {\/} .......... MEX 1,601,900 19,022,563 0.8
Telecom Italia Mobile Di Risp S.p.A.-/- ................. ITLY 16,230,000 17,892,943 0.7
Korea Mobile Telecom-/- ................................. KOR 16,500 15,947,915 0.6
Telecom Italia Mobile S.p.A. ............................ ITLY 8,365,001 14,079,965 0.6
Telephone and Data Systems, Inc. ........................ US 258,500 10,340,000 0.4
Total Access Communication Public Co., Ltd. ............. THAI -- -- 0.4
Common-/- {\/} ........................................ -- 1,125,000 6,806,250 --
144A{.} -/- {\/} ...................................... -- 286,400 1,732,720 --
Rogers Cantel Mobile Communications "B"-/- .............. CAN 382,000 7,950,609 0.3
Tele 2000 S.A.{::} -/- .................................. PERU 6,386,222 6,287,539 0.3
American Satellite Network .............................. US 65,825 -- --
--------------
407,272,705
--------------
Telephone Networks (14.2%)
Nippon Telegraph & Telephone Corp. ...................... JPN 6,120 50,236,572 2.0
Stet Di Risp ............................................ ITLY 16,820,000 36,717,190 1.5
SPT Telecom-/- ......................................... CZCH 368,000 36,244,024 1.5
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ......... MEX 1,246,750 34,285,625 1.4
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 677,800 27,027,275 1.1
Frontier Corp. .......................................... US 1,000,000 27,000,000 1.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 147
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telephone Networks (Continued)
Pakistan Telecommunications Co., Ltd. - 144A GDR{.} -/-
{\/ } ................................................. PAK 225,437 $ 21,078,360 0.9
Telefonica de Argentina S.A. - ADR{\/} .................. ARG 993,000 20,604,750 0.8
Stet Societa' Finanziaria Telefonica S.p.A. ............. ITLY 6,750,000 19,099,856 0.8
Telecom Italia - Di Risp ................................ ITLY 16,230,000 19,064,748 0.8
Telecom Argentina S.A. - ADR{\/} ........................ ARG 387,100 14,854,963 0.6
Telecom Italia S.p.A. ................................... ITLY 8,365,001 12,824,794 0.5
Russian Telecommunications Development Corp.: ........... US -- -- 0.3
Non-Voting(.) -/- ..................................... -- 453,000 4,530,000 --
Voting(.) -/- ........................................ -- 331,000 3,310,000 --
Orient Telecom & Technology Holdings Ltd.-/- ............ HK 24,682,000 7,582,232 0.3
Atlantic Tele-Network, Inc.{::} -/- ..................... US 660,100 7,261,100 0.3
TelecomAsia Corp. - Foreign-/- .......................... THAI 1,257,000 3,846,940 0.2
Jasmine International Public Co., Ltd. - Foreign ........ THAI 560,400 3,207,377 0.1
--------------
348,775,806
--------------
Broadcasting & Publishing (7.8%)
Time Warner, Inc. ....................................... US 1,150,400 41,989,600 1.7
News Corp., Ltd.: ....................................... AUSL -- -- 1.2
Common ............................................... -- 3,824,342 19,278,970 --
Preferred ............................................ -- 1,920,750 8,775,891 --
Pearson PLC ............................................. UK 1,800,000 17,923,186 0.7
Granada Group PLC ....................................... UK 1,500,000 16,050,261 0.7
Evergreen Media Corp. "A"-/- ............................ US 571,100 15,562,475 0.6
Canal Plus .............................................. FR 84,390 14,587,205 0.6
Grupo Televisa, S.A. de C.V. - GDR{\/} .................. MEX 800,000 13,700,000 0.6
Tele-Communications Liberty Media Group, Inc. "A"-/- .... US 531,800 13,095,575 0.5
Sistem Televisyen Malaysia Bhd. ......................... MAL 3,718,000 11,707,932 0.5
EchoStar Communications Corp. "A" ....................... US 605,700 8,782,650 0.4
Home Shopping Network, Inc.-/- .......................... US 568,200 4,616,625 0.2
International Broadcasting Corp., Ltd. - Foreign-/- ..... THAI 1,741,900 3,669,344 0.1
Medya Holding AS ........................................ TRKY 37,932,160 1,220,278 --
--------------
190,959,992
--------------
Cable Television (7.1%)
Comcast Corp. "A" ....................................... US 3,404,300 60,851,863 2.5
Nynex CableComms Group: ................................. UK -- -- 1.5
Units-/- ............................................. -- 15,134,000 30,617,228 --
ADR-/- {\/} ........................................... -- 306,900 6,214,725 --
TCI Group "A"-/- ........................................ US 2,127,200 36,162,400 1.5
Rogers Communications, Inc. "B"-/- ...................... CAN 2,376,400 23,288,472 0.9
Bell Cablemedia PLC - ADR{::} -/- {\/} .................. UK 738,300 10,982,213 0.4
International CableTel, Inc.-/- ......................... US 307,333 8,144,325 0.3
--------------
176,261,226
--------------
Telephone - Regional/Local (3.9%)
MFS Communications Co., Inc.-/- ........................ US 1,924,000 77,681,500 3.1
Intermedia Communications of Florida, Inc.{::} -/- ...... US 873,900 11,032,988 0.4
IntelCom Group, Inc.-/- ................................. US 974,300 10,595,513 0.4
--------------
99,310,001
--------------
Semiconductors (3.8%)
Kyocera Corp. ........................................... JPN 1,151,000 94,368,261 3.8
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 148
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Conglomerates (3.4%)
Grupo Carso, S.A. de C.V. "A1"-/- ...................... MEX 9,745,000 $ 51,051,756 2.1
Hutchison Whampoa ....................................... HK 4,800,000 26,448,675 1.1
Alfa, S.A. de C.V. ...................................... MEX 524,000 5,961,236 0.2
--------------
83,461,667
--------------
Telephone - Long Distance (3.3%)
WorldCom, Inc.-/- ....................................... US 1,107,259 36,124,325 1.5
Call-Net Enterprises, Inc.: ............................ CAN -- -- 0.6
"B"-/- ................................................ -- 1,036,700 8,514,672 --
"A"-/- ................................................ -- 519,400 4,362,913 --
144A{.} -/- ........................................... -- 379,400 3,116,105 --
LCI International, Inc.-/- .............................. US 670,000 12,060,000 0.5
GN Store Nord AS ....................................... DEN 134,166 9,946,773 0.4
Philippine Long Distance Telephone Co. ................. PHIL 86,404 4,822,394 0.2
Petersburg Long Distance, Inc.-/- {\/} ................. RUS 510,000 3,187,500 0.1
--------------
82,134,682
--------------
Telecom Technology (3.2%)
Kyushu-Matsushita Electric Co., Ltd. .................... JPN 2,557,000 40,777,908 1.7
Murata Manufacturing Co., Ltd. .......................... JPN 542,000 19,037,081 0.8
DSP Communications, Inc. ................................ US 361,800 13,115,250 0.5
Dialogic Corp.-/- ....................................... US 200,000 5,800,000 0.2
--------------
78,730,239
--------------
Machinery & Engineering (2.1%)
Mannesmann AG ........................................... GER 160,900 52,970,205 2.1
--------------
Consumer Electronics (2.0%)
Amcol Holdings Ltd. ..................................... SING 10,644,000 23,510,995 1.0
Three-Five Systems, Inc.{::} -/- ........................ US 749,000 13,575,625 0.6
Himachal Futuristic Communications Ltd. - 144A GDR{.} -/-
{\/} ................................................... IND 1,613,000 8,871,500 0.4
--------------
45,958,120
--------------
Office Equipment (1.6%)
Canon Inc. .............................................. JPN 1,600,000 27,394,580 1.1
Olivetti Group-/- ....................................... ITLY 16,413,000 12,324,176 0.5
--------------
39,718,756
--------------
Industrial Components (1.4%)
Oak Industries, Inc.-/- ................................. US 597,800 12,479,075 0.5
Alcatel Cable ........................................... FR 133,813 7,801,310 0.3
BICC PLC ................................................ UK 1,500,000 6,211,475 0.3
PT Kabelmetal Indonesia - Local-/- ...................... INDO 5,100,000 4,718,062 0.2
PT Kabelindo Murni - Local{::} .......................... INDO 4,316,000 1,901,322 0.1
PT Voksel Electronics - Foreign ......................... INDO 1,106,700 1,218,833 --
--------------
34,330,077
--------------
Aerospace/Defense (1.2%)
Orbital Sciences Corp.{::} -/- .......................... US 2,095,500 29,860,875 1.2
--------------
Real Estate (1.0%)
Wharf (Holdings) Ltd. ................................... HK 7,298,000 24,637,547 1.0
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 149
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Multi-Industry (0.9%)
Compagnie Generale des Eaux ............................. FR 142,874 $ 13,283,468 0.5
Tadiran Ltd.{\/} ........................................ ISRL 455,600 9,966,250 0.4
--------------
23,249,718
--------------
Automobiles (0.9%)
Edaran Otomobil Nasional Bhd. ........................... MAL 2,926,000 23,034,836 0.9
--------------
Software (0.9%)
Quarterdeck Corp.-/- .................................... US 1,000,000 21,375,000 0.9
--------------
Value Added Telephone Service (0.8%)
International Engineering PLC - Foreign{::} ............. THAI 3,057,700 14,583,625 0.6
Sapura Telecommunications Bhd. ......................... MAL 4,730,000 5,417,949 0.2
--------------
20,001,574
--------------
Networking (0.3%)
Cisco Systems, Inc.-/- .................................. US 85,000 6,587,500 0.3
--------------
Other Financial (0.2%)
Phatra Thanakit Co., Ltd. - Foreign ..................... THAI 619,500 4,850,616 0.2
--------------
Banks-Regional (0.2%)
Grupo Financiero Banamex Accival, S.A. de C.V. "B" ...... MEX 2,576,000 4,413,933 0.2
--------------
Computers & Peripherals (0.2%)
NEC Corp. ............................................... JPN 300,000 3,962,430 0.2
--------------
Telecom - Other (0.1%)
Radiotronica S.A.{::} -/- .............................. SPN 185,454 1,475,600 0.1
--------------
Retailers-Other (0.0%)
Gran Cadena de Almacenes Colombianos S.A. ............... COL 64,000 71,885 --
Grupo Mexicano de Video - 144A ADR{::} {.} {\/} ......... MEX 122,000 61,000 --
--------------
132,885
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $2,249,438,890) ............ 2,362,188,019 95.8
-------------- -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Structured Notes (0.4%)
Russia (0.4%)
Credit Suisse Synthetic Equity Medium Term Note, 3.25%
due 4/29/97 (This is an equity linked note. The value
of this note is linked to the underlying value of
Rostelecom.) ......................................... USD 7,000,000 8,530,200 0.4
--------------
Corporate Bonds (0.0%)
Malaysia (0.0%)
Sapura Telecommunications Bhd., Convertible Bond, 2%
due 9/14/00 ......................................... MYR 3,547,500 1,064,739 --
-------------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,399,408) .......... 9,594,939 0.4
-------------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 150
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Repurchase Agreement (4.0%) Value Assets {d}
- ----------------------------------------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by:
$99,070,000 U.S. Treasury Bill, due 3/28/96 (market
value of collateral is $96,900,890, including accrued
interest). ........................................... $ 95,015,305 3.8
$4,770,000 U.S. Treasury Bill, due 2/8/96 (market value
of collateral is $4,699,643, including accrued
interest). ........................................... 4,598,741 0.2
-------------- -----
TOTAL REPURCHASE AGREEMENT (cost $99,614,046) ............ 99,614,046 4.0
-------------- -----
TOTAL INVESTMENTS (cost $2,357,452,344) .................. 2,471,397,004 100.2
Other Assets and Liabilities .............................. (5,473,913) (0.2)
-------------- -----
NET ASSETS ............................................... $2,465,923,091 100.0
-------------- -----
-------------- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $2,465,923,091.
-/- Non-income producing security.
{::} See Note 6 of Notes to Financial Statements.
{\/} U.S. currency denominated.
{.} 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.
(.) Restricted securities -- At October 31, 1995, the Fund owned the
following restricted securities constituting 0.3% 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 Market Value
Description Dates Shares Cost Per Share
- --------------------------------------------------------------------------- ----------- ------- ----------- ------------
Russian Telecommunications Development Corporation:
Non-voting............................................................... 12/22/93 453,000 $ 4,530,000 $10.00
Voting................................................................... 12/22/93 331,000 3,310,000 10.00
* For Federal income tax purposes, cost is $2,362,871,101 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 402,432,461
Unrealized depreciation: (293,906,558)
-------------
Net unrealized appreciation: $ 108,525,903
-------------
-------------
</TABLE>
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 151
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 1.4 1.4
Australia (AUSL/AUD) ................. 1.2 1.2
Brazil (BRZL/BRL) .................... 1.1 1.1
Canada (CAN/CAD) ..................... 2.6 2.6
Czech Republic (CZCH/CSK) ........... 1.5 1.5
Denmark (DEN/DKK) .................... 0.4 0.4
Finland (FIN/FIM) .................... 5.7 5.7
France (FR/FRF) ...................... 1.4 1.4
Germany (GER/DEM) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 2.8 2.8
India (IND/INR) ...................... 0.4 0.4
Indonesia (INDO/IDR) ................. 0.3 0.3
Israel (ISRL/ILS) .................... 2.7 2.7
Italy (ITLY/ITL) ..................... 5.4 5.4
Japan (JPN/JPY) ...................... 14.5 14.5
Korea (KOR/KRW) ...................... 0.6 0.6
Luxembourg (LUX/ECU) ................. 1.4 1.4
Malaysia (MAL/MYR) ................... 1.6 1.6
Mexico (MEX/MXN) ..................... 5.3 5.3
Pakistan (PAK/PKR) .................. 0.9 0.9
Peru (PERU/PES) ...................... 0.3 0.3
Philippines (PHIL/PHP) ............... 0.2 0.2
Russia (RUS/SUR) ..................... 0.1 0.4 0.5
Singapore (SING/SGD) ................. 1.0 1.0
Spain (SPN/ESP) ...................... 0.1 0.1
Sweden (SWDN/SEK) .................... 3.8 3.8
Thailand (THAI/THB) .................. 5.5 5.5
Turkey (TRKY/TRL) .................... 0.2 0.2
United Kingdom (UK/GBP) .............. 4.6 4.6
United States (US/USD) ............... 26.7 3.8 30.5
------ --- --- -----
Total ............................... 95.8 0.4 3.8 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $2,465,923,091.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 152
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Contract Price Date (Depreciation)
-------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
French Francs........................................................... 10,584,003 5.06313 11/16/95 $ 364,830
Japanese Yen............................................................ 23,899,325 100.21000 11/08/95 (474,066)
Japanese Yen............................................................ 26,320,810 100.17800 11/08/95 (533,889)
Japanese Yen............................................................ 7,631,347 100.17800 11/08/95 (154,793)
Japanese Yen............................................................ 518,540 97.97300 11/14/95 (22,425)
-------------- -------------
Total Contracts to Buy (Payable amount $69,774,368)................. 68,954,025 (820,343)
-------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 2.80%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
French Francs........................................................... 35,888,057 4.90035 11/16/95 (86,023)
Italian Lira............................................................ 59,513,181 1,605.60000 11/16/95 (465,747)
Japanese Yen............................................................ 50,220,135 90.16900 11/08/95 6,706,303
Japanese Yen............................................................ 43,762,841 96.69750 11/08/95 2,494,818
Japanese Yen............................................................ 72,693,474 89.90000 11/09/95 9,953,912
Japanese Yen............................................................ 72,204,285 91.70000 11/14/95 8,275,542
-------------- -------------
Total Contracts to Sell (Receivable amount $361,160,778)............ 334,281,973 26,878,805
-------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 13.56%
Total Open Forward Foreign Currency Contracts, Net.................. $26,058,462
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 153
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $2,357,452,344)
(Note 1)................................................. $2,471,397,004
U.S. currency.............................. $ 961 --
Foreign currencies (cost $1,379,989)....... 1,426,729 1,427,690
----------
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. 26,058,462
Receivable for securities sold............................ 22,785,737
Receivable for Fund shares sold........................... 7,809,807
Dividends and dividend withholding tax reclaims
receivable............................................... 3,462,722
Receivable for forward foreign currency contracts --
closed (Note 1).......................................... 1,266,060
Interest receivable....................................... 117,769
Unamortized organizational costs.......................... 12,074
Cash held as collateral for securities loaned (Note 1).... 151,557,635
--------------
Total assets............................................ 2,685,894,960
--------------
Liabilities:
Payable for Fund shares repurchased....................... 35,184,262
Payable for securities purchased.......................... 28,518,300
Payable for investment management and administration fees
(Note 2)................................................. 2,043,619
Payable for service and distribution expenses (Note 2).... 1,592,725
Payable for transfer agent fees (Note 2).................. 545,407
Payable for printing and postage expenses................. 322,690
Payable for custodian fees (Note 1)....................... 62,674
Payable for fund accounting fees (Note 2)................. 55,425
Payable for professional fees............................. 39,053
Payable for registration and filing fees.................. 25,202
Payable for Directors' fees and expenses (Note 2)......... 7,904
Other accrued expenses.................................... 16,973
Collateral for securities loaned (Note 1)................. 151,557,635
--------------
Total liabilities....................................... 219,971,869
--------------
Net assets.................................................. $2,465,923,091
--------------
--------------
Class A:
Net asset value and redemption price per share
($1,353,722,073 DIVIDED BY 82,457,608 shares
outstanding)............................................... $ 16.42
--------------
--------------
Maximum offering price per share
(100/95.25 of $16.42) *.................................... $ 17.24
--------------
--------------
Class B:+
Net asset value and offering price per share
($1,111,520,240 DIVIDED BY 68,621,620 shares
outstanding)............................................... $ 16.20
--------------
--------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share
($680,778 DIVIDED BY 41,371 shares outstanding)............ $ 16.46
--------------
--------------
Net assets consist of:
Paid in capital (Note 4).................................. $2,238,611,664
Accumulated net realized gain on investments and foreign
currency transactions.................................... 87,129,699
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies........................ 26,237,068
Net unrealized appreciation of investments................ 113,944,660
--------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $2,465,923,091
--------------
--------------
<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 154
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$2,932,991)................................................. $ 25,666,862
Interest income.............................................. 7,204,936
-------------
Total investment income.................................... 32,871,798
-------------
Expenses:
Investment management and administration fees (Note 2)....... 23,861,460
Service and distribution expenses: (Note 2)
Class A.................................. $ 7,238,541
Class B.................................. 11,199,568 18,438,109
-------------
Transfer agent fees (Note 2)................................. 6,735,000
Custodian fees (Note 1)...................................... 1,462,916
Printing and postage expenses................................ 1,071,067
Fund accounting fees (Note 2)................................ 654,836
Registration and filing fees................................. 101,000
Directors' fees and expenses (Note 2)........................ 43,535
Legal fees................................................... 35,450
Insurance expenses........................................... 33,304
Amortization of organization costs (Note 1).................. 17,750
Audit fees................................................... 13,700
Other expenses............................................... 37,165
-------------
Total expenses before reductions........................... 52,505,292
-------------
Expense reductions (Notes 1 & 7)......................... (1,379,807)
-------------
Total net expenses......................................... 51,125,485
-------------
Net investment loss............................................ (18,253,687)
-------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 139,255,816
Net realized loss on foreign currency
transactions.............................. (26,974,212)
-------------
Net realized gain during the year.......................... 112,281,604
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 20,055,808
Net change in unrealized appreciation of
investments............................... (203,028,268)
-------------
Net unrealized depreciation during the year................ (182,972,460)
-------------
Net realized and unrealized loss on investments and foreign
currencies.................................................... (70,690,856)
-------------
Net decrease in net assets resulting from operations........... $ (88,944,543)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 155
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment (loss)...................... $ (18,253,687) $ (5,008,280)
Net realized gain on investments and
foreign currency transactions............. 112,281,604 137,990,064
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 20,055,808 3,578,825
Net change in unrealized appreciation
(depreciation) of investments............. (203,028,268) 27,259,645
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (88,944,543) 163,820,254
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. -- (1,139,864)
From net realized gain on investments...... (78,594,102) (20,482,527)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. -- (511,428)
From net realized gain on investments...... (58,563,435) (9,209,255)
----------------- -----------------
Total distributions...................... (137,157,537) (31,343,074)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,799,851,047 1,678,630,071
Decrease from capital shares repurchased... (1,936,308,797) (661,298,601)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (136,457,750) 1,017,331,470
----------------- -----------------
Total increase (decrease) in net assets...... (362,559,830) 1,149,808,650
Net assets:
Beginning of year.......................... 2,828,482,921 1,678,674,271
----------------- -----------------
End of year................................ $2,465,923,091 $2,828,482,921
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 156
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
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
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------------- TO OCTOBER 31,
1995 1994(C) 1993 1992
------------ ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.80 $ 16.92 $ 11.16 $ 11.43
------------ ------------- ------------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.09) (0.01) 0.08 0.14*
Net realized and unrealized gain
(loss) on investments................ (0.43) 1.17 5.83 (0.41)
------------ ------------- ------------- -----------------
Net increase (decrease) from
investment operations.............. (0.52) 1.16 5.91 (0.27)
------------ ------------- ------------- -----------------
Distributions to shareholders:
From net investment income............ -- (0.01) (0.15) --
From net realized gain on
investments.......................... (0.86) (0.27) -- --
------------ ------------- ------------- -----------------
Total distributions................. (0.86) (0.28) (0.15) --
------------ ------------- ------------- -----------------
Net asset value, end of period.......... $ 16.42 $ 17.80 $ 16.92 $ 11.16
------------ ------------- ------------- -----------------
------------ ------------- ------------- -----------------
Total investment return (d)............. (2.88)% 7.02% 53.60% (2.40)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,353,722 $1,644,402 $1,223,340 $442,862
Ratio of net investment income (loss) to
average net assets..................... (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to average net assets
With expense reductions (Notes 1 &
7)................................... 1.77% 1.8% 2.0% 2.3%*(b)
Without expense reductions............ 1.83% --%** --%** --%**
Portfolio turnover rate++++............. 62% 57% 41% 4%(b)
</TABLE>
- ----------------
+ 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.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class 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).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charge.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 157
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS+++
---------
CLASS B++ JUNE 1,
--------------------------------------------- 1995
APRIL 1, 1993 TO
YEAR ENDED OCTOBER 31, TO OCTOBER
---------------------------- OCTOBER 31, 31,
1995 1994(C) 1993 1995
------------ ------------- -------------- ---------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.66 $ 16.87 $ 12.68 $15.24
------------ ------------- -------------- ---------
Income from investment operations:
Net investment income (loss).......... (0.17) (0.10) 0.01 0.00
Net realized and unrealized gain
(loss) on investments................ (0.43) 1.17 4.18 1.22
------------ ------------- -------------- ---------
Net increase (decrease) from
investment operations.............. (0.60) 1.07 4.19 1.22
------------ ------------- -------------- ---------
Distributions to shareholders:
From net investment income............ -- (0.01) -- 0.00
From net realized gain on
investments.......................... (0.86) (0.27) -- 0.00
------------ ------------- -------------- ---------
Total distributions................. (0.86) (0.28) -- 0.00
------------ ------------- -------------- ---------
Net asset value, end of period.......... $ 16.20 $ 17.66 $ 16.87 $16.46
------------ ------------- -------------- ---------
------------ ------------- -------------- ---------
Total investment return (d)............. (3.37)% 6.50% 33.00%(a) 7.94%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,111,520 $1,184,081 $455,335 $ 681
Ratio of net investment income (loss) to
average net assets..................... (0.99)% (0.52)% 0.3%(b) 0.01%(b)
Ratio of expenses to average net assets
With expense reductions (Notes 1 &
7)................................... 2.27% 2.3% 2.5%(b) 1.27%(b)
Without expense reductions............ 2.33% --%** --%** 1.33%(b)
Portfolio turnover rate++++............. 62% 57% 41% 62%
</TABLE>
- ----------------
+ 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.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class 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).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charge.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 158
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 159
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities". 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
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract a
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange of which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 160
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, securities with an aggregate value of approximately
$137,286,521 were on loan to brokers. The loans were secured by cash collateral
of $151,557,635. 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, 1995, the Fund received $1,141,607 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $88,750. These expenses
are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the 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 Fund may focus its investments in certain related
telecommunication industries, subjecting the Fund to greater risk than a fund
that is more diversified.
(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
Statement of Additional Information Page 161
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$578,450 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $49,798 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $4,770,375. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T.
Statement of Additional Information Page 162
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
Capital ("G.T. Funds") and 0.02% to the assets in excess of $5 billion and
dividing the result by the aggregate assets of the G.T. Funds. For the period
ended October 31, 1995, the Fund paid fund accounting fees of $170,297 to G.T.
Capital.
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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$1,521,325,782 and $1,784,269,521, respectively. There were no purchases or
sales of U.S. government obligations by the Fund for the year ended October 31,
1995.
4. CAPITAL SHARES
At October 31, 1995, 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; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 83,031,164 $ 1,357,464,500 49,183,489 $ 833,820,941
Shares issued in connection with reinvestment of distributions.......... 3,938,085 63,284,987 1,050,827 17,160,181
----------- --------------- ----------- -------------
86,969,249 1,420,749,487 50,234,316 850,981,122
Shares repurchased...................................................... (96,901,218) (1,584,327,366) (30,135,506) (509,780,043)
----------- --------------- ----------- -------------
Net increase (decrease)................................................. (9,931,969) $ (163,577,879) 20,098,810 $ 341,201,079
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 20,348,248 $ 330,809,778 48,594,410 $ 819,697,227
Shares issued in connection with reinvestment of distributions.......... 2,988,078 47,599,706 488,736 7,951,722
----------- --------------- ----------- -------------
23,336,326 378,409,484 49,083,146 827,648,949
Shares repurchased...................................................... (21,776,751) (351,935,028) (9,006,454) (151,518,558)
----------- --------------- ----------- -------------
Net increase............................................................ 1,559,575 $ 26,474,456 40,076,692 $ 676,130,391
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
----------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 44,033 $ 692,076
Shares repurchased...................................................... (2,662) (46,403)
----------- ---------------
Net increase............................................................ 41,371 $ 645,673
----------- ---------------
----------- ---------------
</TABLE>
Statement of Additional Information Page 163
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
5. WRITTEN OPTIONS
The Fund's written options contracts activity for the year ended October 31,
1995, was as follows:
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL AMOUNT
IN USD PREMIUMS
-------------- -----------
<S> <C> <C>
Options outstanding at October 31, 1994........................................................ 300,000,000 $ 8,430,000
Options written................................................................................ 0 0
Options cancelled in closing purchase transactions (loss of $4,965,000 realized)............... (300,000,000) (8,430,000)
Options expired prior to exercise.............................................................. 0 0
Options exercised.............................................................................. 0 0
-------------- -----------
Options outstanding at October 31, 1995........................................................ 0 $ 0
-------------- -----------
-------------- -----------
</TABLE>
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to
$173,816,787, at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ----------------------------------------------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
ANTEC Corp................................................................... $39,881,349 $ 744,751 $ (149,661) $ --
Atlantic Tele-Network, Inc................................................... 216,146 -- -- --
Bell Cablemedia PLC - ADR.................................................... 12,833,179 -- -- --
Grupo Mexicano de Video - 144A ADR........................................... -- -- -- --
Intermedia Communications of Florida, Inc.................................... -- -- -- --
International Engineering PLC - Foreign...................................... 10,064,198 -- -- --
Millicom International Cellular S.A.......................................... 4,175,625 1,186,241 316,004 --
Orbital Sciences Corp........................................................ 11,705,749 809,678 333,306 --
PT Kabelindo Murni - Local................................................... 2,403,079 -- -- 185,052
Radiotronica S.A............................................................. -- 1,291,051 (516,772) --
Spectrian Corp............................................................... 19,582,900 -- -- --
Tele 2000 S.A................................................................ 173,893 -- -- --
Three-Five Systems, Inc...................................................... 17,650,046 -- -- --
</TABLE>
7. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $238,200 under these arrangements.
8. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's investment manager and
administrator, currently named G.T. Capital Management, Inc., will be changed to
"LGT Asset Management, Inc.", and G.T. Global Financial Services, Inc., which
serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.173 per share (representing an approximate total of
$25,368,596). The total amount of taxes paid by the Fund to such countries was
approximately $0.031 per share (representing an approximate total of
$4,523,548).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$79,742,755 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 164
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 166
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 167
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 168
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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., GT GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, GT GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, GT GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, GT GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
GT GLOBAL HEALTH CARE FUND, GT GLOBAL TELECOMMUNICATIONS FUND, LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON IN SUCH JURISDICTION TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THESA602MC
<PAGE>
GT GLOBAL INCOME FUNDS
50 California Street, 27th Floor
San Francisco, California 94111-4624
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Government Income Fund ("Government Income Fund"), GT Global
Strategic Income Fund ("Strategic Income Fund") and GT Global High Income Fund
("High Income Fund") (individually, a "Fund," collectively, the "Funds"). Each
Fund is a mutual fund organized as a separate non-diversified series of G.T.
Investment Funds, Inc. ("Company"), a registered open-end management investment
company. This Statement of Additional Information, which is not a Prospectus,
supplements and should be read in conjunction with the Funds' current Class A
and B Prospectus dated February 29, 1996, a copy of which is available without
charge by writing to the above address or by calling the Funds at the toll-free
telephone number listed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the investment
manager and administrator for the Government Income Fund, the Strategic Income
Fund and the Global High Income Portfolio ("Portfolio") and also serves as the
administrator of the High Income Fund. The distributor of the shares of each
Fund is GT Global, Inc. ("GT Global"). The Funds' transfer agent is GT Global
Investor Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies............................................................... 2
Options, Futures and Currency Strategies......................................................... 6
Risk Factors..................................................................................... 15
Investment Limitations........................................................................... 19
Execution of Portfolio Transactions.............................................................. 23
Directors, Trustees and Executive Officers....................................................... 25
Management....................................................................................... 27
Valuation of Fund Shares......................................................................... 31
Information Relating to Sales and Redemptions.................................................... 32
Taxes............................................................................................ 34
Additional Information........................................................................... 37
Investment Results............................................................................... 38
Description of Debt Ratings...................................................................... 45
Financial Statements............................................................................. 47
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The Government Income Fund primarily seeks high current income and secondarily
seeks capital appreciation and protection of principal through active management
of the maturity structure and currency exposure of its portfolio. The Strategic
Income Fund and the High Income Fund primarily seek high current income and
secondarily seek capital appreciation. The High Income Fund seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which, like the High Income Fund, is a non-diversified open-end
management investment company with investment objectives identical to those of
the High Income Fund. Whenever the phrase "all of the High Income Fund's
investable assets" is used herein and in the Prospectus, it means that the only
investment securities that will be held by the High Income Fund will be its
interest in the Portfolio. The High Income Fund may withdraw its investment in
the Portfolio at any time, if the Board of Directors of the Company determines
that it is in the best interests of the Fund and its shareholders to do so. Upon
any such withdrawal, the High Income Fund's assets would be invested in
accordance with the investment policies described below with respect to the
Portfolio.
INVESTMENT IN EMERGING MARKETS
The Portfolio seeks its objectives by investing, under normal circumstances, at
least 65% of its total assets in debt securities of issuers in emerging markets.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
of issuers in emerging markets. The Strategic Income Fund and the Portfolio do
not consider the following countries to be emerging markets: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom,
and United States.
In determining what countries constitute emerging markets, LGT Asset Management
will consider, among other things, data, analysis, and classification of
countries published or disseminated by the International Bank for Reconstruction
and Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF DEBT INVESTMENTS
LGT Asset Management is the investment manager of the Government Income Fund,
the Strategic Income Fund and the Portfolio. In determining the appropriate
distribution of investments among various countries and geographic regions for
the Government Income Fund, the Strategic Income Fund and the Portfolio, LGT
Asset Management ordinarily considers the following factors: prospects for
relative economic growth among the different countries in which the Government
Income Fund, the Strategic Income Fund and the Portfolio may invest; expected
levels of inflation; government policies influencing business conditions; the
outlook for currency relationships; and the range of the individual investment
opportunities available to international investors.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in the following types of money market instruments (i.e., debt
instruments with less than 12 months remaining until maturity) denominated in
U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations: (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Government Income
Fund, the Strategic Income Fund and the Portfolio may not invest more than 25%
of their respective total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Government Income Fund,
the Strategic Income Fund and the Portfolio presently may be made only by
acquiring shares of other investment companies with local governmental approval
to invest in those countries. At such time as direct investment in these
countries is allowed, the Government Income Fund, the Strategic Income Fund and
the Portfolio anticipate investing directly in these markets. The Government
Income Fund, the Strategic Income Fund and the Portfolio may also invest in the
securities of closed-end investment
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL INCOME FUNDS
companies within the limits of the Investment Company Act of 1940, as amended
("1940 Act"). These limitations currently provide that, in part, a Fund or the
Portfolio may purchase shares of another investment company unless (a) such a
purchase would cause the Government Income Fund, the Strategic Income Fund or
the Portfolio to own in the aggregate more than 3% of the total outstanding
voting securities of the investment company or (b) such a purchase would cause
the Government Income Fund, the Strategic Income Fund or the Portfolio to have
more than 5% of its total assets invested in the investment company or more than
10% of its aggregate assets invested in an aggregate of all such investment
companies. The foregoing limitations do not apply to the investment by the High
Income Fund in the Portfolio. Investment in investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Government Income Fund, the Strategic Income Fund and the
Portfolio do not intend to invest in such investment companies unless, in the
judgment of LGT Asset Management, 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.
SAMURAI AND YANKEE BONDS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai
bonds"), and may invest in dollar-denominated bonds sold in the United States by
non-U.S. issuers ("Yankee bonds"). It is the policy of the Government Income
Fund, the Strategic Income Fund and the Portfolio to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Government Income Fund, the Strategic
Income Fund or the Portfolio in connection with other securities or separately
and provide a Fund or the Portfolio with the right to purchase at a later date
other securities of the issuer. As a condition of its continuing registration in
a state, the Government Income Fund, the Strategic Income Fund and the Portfolio
each 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 ("NYSE"). Warrants or
rights acquired by the Government Income Fund, the Strategic Income Fund or the
Portfolio in units or attached to securities will be deemed to be without value
for purpose of this restriction. These limits are not fundamental policies of
the Government Income Fund, the Strategic Income Fund or the Portfolio and may
be changed by a vote of a majority of the Company's Board of Directors or the
Portfolio's Board of Trustees without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Strategic Income Fund or the
Portfolio may make secured loans of portfolio securities amounting to not more
than 30% of its total assets. Securities loans are made to broker/dealers or
institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the value
of the securities lent plus any accrued interest, "marked to market" on a daily
basis. The collateral received will consist of cash, U.S. short-term government
securities, bank letters of credit or such other collateral as may be permitted
under the Strategic Income Fund's or the Portfolio's investment program and by
regulatory agencies and approved by the Company's Board of Directors. While the
securities loan is outstanding, the Strategic Income Fund and the 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. The Strategic Income Fund and the
Portfolio each will have a right to call each loan and obtain the securities on
five business days' notice. The Government Income Fund, the Strategic Income
Fund and the Portfolio will not have the right to vote equity securities while
they are lent, but each 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 be made only to firms deemed by
LGT Asset Management to be of good standing and will not be made unless, in the
judgment of LGT Asset Management, the consideration to be earned from such loans
would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Strategic Income Fund's and the 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, however, may be
limited by the terms of a specific obligation and by government regulation. As
with investment in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the the Strategic Income Fund and the Portfolio to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although the Strategic Income Fund and the Portfolio typically will
acquire obligations issued and supported by the credit of U.S. or
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GT GLOBAL INCOME FUNDS
foreign banks having total assets at the time of purchase in excess of $1
billion, this $1 billion figure is not an investment policy or restriction of
either Fund or the 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
The Government Income Fund, the Strategic Income Fund and the Portfolio may
enter into repurchase agreements. Repurchase agreements are transactions in
which the Fund or Portfolio buys 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 Funds or Portfolio if the other party to
the repurchase agreement becomes bankrupt, the Government Income Fund, the
Strategic Income Fund and the Portfolio intend to enter into repurchase
agreements only with banks and broker/dealers believed by LGT Asset Management
to present minimal credit risks in accordance with guidelines approved by the
Company's Board of Directors. (The term "Company's Board of Directors" as used
herein shall refer to the Board of Directors of the Company and the Board of
Trustees of the Portfolio, as applicable). LGT Asset Management reviews and
monitors the creditworthiness of such institutions under the Board's general
supervision.
The Government Income Fund, the Strategic Income Fund and the Portfolio will
invest only in repurchase agreements collateralized at all times in an amount at
least equal to the repurchase price plus accrued interest. To the extent that
the proceeds from any sale of such collateral upon a default in the obligation
to repurchase were less than the repurchase price, the Government Income Fund,
the Strategic Income Fund or the 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 the Government Income Fund, the Strategic Income
Fund's or the Portfolio's ability to sell the collateral and the Government
Income Fund, the Strategic Income Fund or the Portfolio could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, the Government Income Fund,
the Strategic Income Fund and the Portfolio intend to comply with provisions
under such Code that would allow the immediate resale of such collateral. The
Government Income Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the value of
its total assets would be invested in such repurchase agreements and other
illiquid investments and securities for which no readily available market
exists.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Government Income Fund's borrowings will not exceed 30% of the Fund's total
assets, i.e., the Fund's total assets at all times will equal at least 300% of
the amount of outstanding borrowings. If market fluctuations in the value of the
Fund's portfolio holdings or other factors cause the ratio of the Fund's total
assets to outstanding borrowings to fall below 300%, within three days
(excluding Sundays and holidays) of such event the Fund may be required to sell
portfolio securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Strategic Income
Fund's and the Portfolio's borrowings will not exceed 33 1/3% of the Strategic
Income Fund's or the Portfolio's, respective total assets. The Government Income
Fund, the Strategic Income Fund and the Portfolio each may borrow up to 5% of
its respective total assets for temporary or emergency purposes other than to
meet redemptions. Any borrowing by a Fund or the Portfolio may cause greater
fluctuation in the value of its shares than would be the case if the Fund or the
Portfolio did not borrow.
The Government Income Fund's, the Strategic Income Fund's and the Portfolio's
fundamental investment limitations permit it to borrow money for leveraging
purposes. The Government Income Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by a
vote of a majority of the Company's Board of Directors. The Strategic Income
Fund and Portfolio may borrow for leveraging purposes. In the event that the
Strategic Income Fund or the Portfolio employs leverage, it would be subject to
certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in the Fund's
or the Portfolio's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Government Income Fund's, the Strategic Income Fund's or the Portfolio's
earnings or net asset value will increase faster than otherwise would be the
case; conversely, if such income and gains fail to exceed such costs, the Fund's
or the Portfolio's earnings or net asset value would decline faster than would
otherwise be the case.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
enter into reverse repurchase agreements. A reverse repurchase agreement is a
borrowing transaction in which a Fund or the Portfolio transfers possession of
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GT GLOBAL INCOME FUNDS
a security to another party, such as a bank or broker/dealer, in return for
cash, and agrees to repurchase the security in the future at an agreed upon
price, which includes an interest component. The Government Income Fund, the
Strategic Income Fund and the Portfolio also may engage in "roll" borrowing
transactions which involve a Fund's or the Portfolio's sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which a Fund or the Portfolio may receive a fee) to purchase
similar, but not identical, securities at a future date. The Government Income
Fund, the Strategic Income Fund and the 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
The Government Income Fund, the Strategic Income Fund and the Portfolio are
authorized to make short sales of securities, although they have no current
intention of doing so. A short sale is a transaction in which a Fund or the
Portfolio sells a security in anticipation that the market price of that
security will decline. The Government Income Fund, the Strategic Income Fund and
the Portfolio may make short sales as a form of hedging to offset potential
declines in long positions in securities it owns, or anticipates acquiring, and
in order to maintain portfolio flexibility. The Government Income Fund, the
Strategic Income Fund and the Portfolio only may make short sales "against the
box." In this type of short sale, at the time of the sale, the Fund or the
Portfolio owns the security it has sold short or has the immediate and
unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Government
Income Fund, the Strategic Income Fund or the Portfolio will deposit in a
separate account with its custodian an equal amount of the securities sold short
or securities convertible into or exchangeable for such securities at no cost.
The Government Income Fund, the Strategic Income Fund or the Portfolio could
close out a short position by purchasing and delivering an equal amount of the
securities sold short, rather than by delivering securities already held by the
Fund or the Portfolio, because the Fund or the Portfolio might want to continue
to receive interest and dividend payments on securities in its portfolio that
are convertible into the securities sold short.
The Government Income Fund, the Strategic Income Fund and the Portfolio might
make a short sale "against the box" in order to hedge against market risks when
LGT Asset Management believes that the price of a security may decline, causing
a decline in the value of a security owned by the Government Income Fund, the
Strategic Income Fund or the Portfolio or a security convertible into or
exchangeable for such security, or when LGT Asset Management wants to sell the
security the Fund or the Portfolio owns at a current attractive price, but also
wishes to defer recognition of gain or loss for federal income tax purposes and
for purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code of 1986, as amended (the "Code"). In
such case, any future losses in the Government Income Fund's, the Strategic
Income Fund's Fund or the Portfolio's long position should be reduced by a gain
in the short position. Conversely, any gain in the long position should be
reduced by a loss in the short position. The extent to which such gains or
losses in the long position are reduced will depend upon the amount of the
securities sold short relative to the amount of the securities the Fund or the
Portfolio owns, either directly or indirectly, and, in the case where a Fund or
the Portfolio owns convertible securities, changes in the investment values or
conversion premiums of such securities. There will be certain additional
transaction costs associated with short sales "against the box," but a Fund or
the Portfolio will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.
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GT GLOBAL INCOME 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 LGT Asset
Management'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 LGT Asset Management is
experienced in the use of these instruments, there can be no assurance that
any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund or the Portfolio
entered into a short hedge because LGT Asset Management projected a decline
in the price of a security in the Fund's or the Portfolio's portfolio, and
the price of that security increased instead, the gain from that increase
might by wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Fund or the
Portfolio could suffer a loss. In either such case, the Fund or the
Portfolio would have been in a better position had it not hedged at all.
(4) As described below, a Fund or the 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 a Fund or
the Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's ability or the Portfolio's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund or the Portfolio sell a
portfolio security at a disadvantageous time. The Fund's or the Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of the other party to
the transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to the Fund or the Portfolio.
WRITING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund and the 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
LGT Asset Management 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 Government Income Fund, the Strategic Income Fund and the Portfolio.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
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GT GLOBAL INCOME FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with a
Fund's or the Portfolio's investment objectives. When writing a call option, the
Government Income Fund, the Strategic Income Fund or the 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 Fund or the
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 Fund or the Portfolio has
written expires, the Fund or the Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Fund or the 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. The Government Income Fund, the Strategic Income
Fund and the Portfolio do not consider a security or currency covered by a call
option to be "pledged" as that term is used in the Government Income Fund's, the
Strategic Income Fund's and the Portfolio's fundamental investment policy that
limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund or the Portfolio will
be obligated to sell the security or currency at less than its market value.
The premium that the Government Income Fund, the Strategic Income Fund or the
Portfolio receives for writing a call option is deemed to constitute the market
value of an option. The premium a Fund or the 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, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Government Income
Fund, the Strategic Income Fund or the Portfolio to write another call option on
the underlying security or currency with either a different exercise price,
expiration date or both.
The Government Income Fund, the Strategic Income Fund and the Portfolio will pay
transaction costs in connection with the writing of options and in entering into
closing purchase contracts. Transaction costs relating to options activity
normally are higher than those applicable to purchases and sales of portfolio
securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund or the 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 Fund or the 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 Fund or the Portfolio.
WRITING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the 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
anytime until (American Style) or on (European Style) the expiration date. The
operation of put options in other respects, including their related risks and
rewards, is substantially identical to that of call options.
A Fund or the Portfolio generally would write put options in circumstances where
LGT Asset Management wishes to purchase the underlying security or currency for
the Fund's or the Portfolio's portfolio at a price lower than the current market
price of the security or currency. In such event, the Fund or the Portfolio
would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay. Since the
Fund or the Portfolio also would receive interest on debt securities or
currencies maintained to cover the exercise price of the option,
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GT GLOBAL INCOME FUNDS
this technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund or the Portfolio
will be obligated to purchase the security or currency at greater than its
market value.
PURCHASING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
purchase put options on securities, indices and currencies. As the holder of a
put option, the Government Income Fund, the Strategic Income Fund or the
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. The Government Income Fund, the Strategic Income Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
A Fund or the Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund or the Portfolio as a hedging
technique in order to protect against an anticipated decline in the value of the
security or currency. Such hedge protection is provided only during the life of
the put option when the Fund or the 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 LGT Asset
Management 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 eventually is sold.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase put options at a time when that Fund or the Portfolio does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund or the 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 Fund or the Portfolio will lose its
entire investment in the put option. In order for the purchase of a put option
to be profitable, the market price of the underlying security or currency must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund or the Portfolio may
purchase call options on securities, indices and currencies. As the holder of a
call option, a Fund or the 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 Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
Call options may be purchased by a Fund or the 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 the Fund or the
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 also may be useful to a Fund or the
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, a Fund or the 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.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase call options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A call option
could be purchased for this purpose where tax considerations make it inadvisable
to realize such gains through a closing purchase transaction. Call options also
may be purchased at times to avoid realizing losses that would result in a
reduction of a Fund's or the Portfolio's current return. For example, where a
Fund or the 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 the Fund or the Portfolio, an increase in the market
price could result in the exercise of the call option
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GT GLOBAL INCOME FUNDS
written by the Fund or the Portfolio and the realization of a loss on the
underlying security or currency. Accordingly, the Fund or the Portfolio could
purchase a call option on the same underlying security or currency, which could
be exercised to fulfill the Fund's or the Portfolio's delivery obligations under
its written call (if it is exercised). This strategy could allow the Fund or the
Portfolio to avoid selling the portfolio security or currency at a time when it
has an unrealized loss; however, the Fund or the Portfolio would have to pay a
premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's
or the Portfolio's total assets at the time of purchase.
The Government Income Fund, the Strategic Income Fund or the 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 a
Fund or the 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 of the option. A call option gives
a Fund or the 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 of the option. A Fund or
the 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 the Fund or the 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 the Fund or the 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. The Funds and the Portfolio will not purchase an OTC option unless the
Fund or the Portfolio 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 the average of the last bid prices obtained from dealers,
unless a quotation from only one dealer is available, in which case only that
dealer's price will be used. In the case of OTC options, there can be no
assurance that a liquid secondary market will exist for any particular option at
any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Fund or the Portfolio may also sell OTC
options and, in connection therewith, segregate assets or cover its obligations
with respect to OTC options written by the Fund or the Porfolio. The assets used
as cover for OTC options written by a Fund or the Portfolio will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund or the Portfolio may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.
A Fund's or the Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
and the 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 each Fund and the Portfolio will enter into OTC options
only with contra parties that are expected to be capable of entering into
closing transactions with the Fund or the Portfolio, there is no assurance that
the Fund or the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the extent of insolvency
of the contra party, the Fund or the Portfolio might be unable to close out an
OTC option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund or the 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 Fund or the Portfolio an amount of cash if the closing level of
the index upon which the call is based is greater than the exercise price of the
call. The amount of cash is equal to the difference between the closing price of
the index and the exercise price of the call times a specified multiple (the
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GT GLOBAL INCOME FUNDS
"multiplier"), which determines the total dollar value for each point of such
difference. When a Fund or the 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
Fund or the 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
Fund's or the Portfolio's exercise of the put, to deliver to the Fund or the
Portfolio an amount of cash if the closing level of the index upon which the put
is based is less than the exercise price of the put, which amount of cash is
determined by the multiplier, as described above for calls. When a Fund or the
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 Fund or the Portfolio to
deliver to it an amount of cash equal to the difference between the closing
level of the index and the exercise price times the multiplier, if the closing
level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund or the
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 Fund or the 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 Fund or the
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 Fund or the 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 Fund or the Portfolio, as the
call writer, will not know that it has been assigned until the next business day
at the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Fund or the 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 Fund or the Portfolio will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into interest rate or currency futures contracts, including futures contracts on
indices of debt securities, ("Futures" or "Futures Contracts"), as a hedge
against changes in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective return on securities
or currencies held or intended to be acquired by the Fund or the Portfolio. The
Government Income Fund, the Strategic Income Fund's or the Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates or decreases in currency exchange rates, and
purchases of Futures as an offset against the effect of expected declines in
interest rates or increases in currency exchange rates.
The Government Income Fund's, the Strategic Income Fund and the 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 Fund's or the Portfolio's exposure to interest rate and
currency exchange rate fluctuations, a Fund or the Portfolio may be able to
hedge exposure more effectively and at a lower cost through using Futures
Contracts.
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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 (debt
security or currency) for a specified price at a designated date, time and
place. An index Futures Contract provides for the delivery, at a designated
date, time and place, of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of trading on the
contract and the price at which the Futures Contract is originally struck; no
physical delivery of the securities comprising the index is made. Brokerage fees
are incurred when a Futures Contract is bought or sold, and margin deposits must
be maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a gain; if it is more, the
Government Income Fund, the Strategic Income Fund or the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Government Income Fund, the Strategic Income Fund or the
Portfolio realizes a gain; if it is less, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a loss. The transaction costs
also must be included in these calculations. There can be no assurance, however,
that a Fund or the Portfolio will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at a particular time.
If a Fund or the Portfolio is not able to enter into an offsetting transaction,
the Fund or the Portfolio will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one 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 Government
Income Fund, the Strategic Income Fund or the Portfolio.
The Government Income Fund, the Strategic Income Fund's and the 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 the Fund or the Portfolio owns, or Futures Contracts will be
purchased to protect the Fund or the 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 the Government Income Fund, the Strategic Income Fund or the
Portfolio in order to initiate Futures trading and to maintain the Fund's or the
Portfolio's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure a
Fund's or the Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded, and may be modified significantly from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund or the 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
valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's or the
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
Futures and for securities 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
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deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit, if
the Futures Contract were closed out. Thus, a purchase or sale of a Futures
Contract may result in losses in excess of the amount invested in the Futures
Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund or the 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 Fund or the
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Fund or the
Portfolio would continue to be required to make daily variation margin payments
and might be required to maintain the position being hedged by the Future or
option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund or the 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 Fund or the 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 Fund or the 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
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GT GLOBAL INCOME FUNDS
amount by which options are "in-the-money") will not exceed 5% of the
liquidation value of a Fund's or the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund or
the Portfolio has entered into. In general, a call option on a Futures Contract
is "in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors or the Portfolio's Board of Trustees, as applicable, without
a shareholder vote. This limitation does not limit the percentage of a Fund's or
the Portfolio's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The
Government Income Fund, the Strategic Income Fund and the Portfolio either may
accept or make delivery of the currency at the maturity of the Forward Contract.
A Fund or the 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 Fund or the Portfolio engages in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. A Fund or the
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 Fund or the 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, the Funds or
the 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. The Government Income Fund, the Strategic Income Fund or
the 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 Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable.
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into Forward Contracts either with respect to specific transactions or with
respect to the overall investment of the Fund or the 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 the Fund or the
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 Fund or the 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 Fund or the 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 the Fund or the Portfolio to
sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund or the
Portfolio to sell a currency, the Fund or the Portfolio either may sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund or the
Portfolio will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, the Fund or the 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. The Fund or the 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 Fund or the 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 usually are
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund or the Portfolio owns or intends to acquire, but
it does establish a rate of exchange in advance. In addition, while Forward
Contracts limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
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FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund or the 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 Fund's or the Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that a Fund or the
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 Fund or the 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 Fund or the 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 LGT Asset Management
believes will have a positive correlation to the value of the currency being
hedged. The risk that movements in the price of the contract will not correlate
perfectly with movements in the price of the currency being hedged is magnified
when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund or the 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 Fund or the 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 Fund or the Portfolio has purchased) expose the Fund or the
Portfolio to an obligation to another party. A Fund or the 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 Fund and the 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.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's or the Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Fund's or the Portfolio's ability to
meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund and the Portfolio usually will enter into interest
rate swaps on a net basis, that is, the two payment streams are netted out in a
cash settlement on the payment date or dates specified in the instrument, with
the Strategic Income Fund or the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments. The net amount of the excess, if
any, of each of the Strategic Income Fund's and the Portfolio's obligations over
its entitlements with respect to each swap will be accrued on a daily basis and
an amount of cash, U.S. government securities or other liquid high grade debt
obligations having an aggregate net asset value at least equal to the accrued
excess will be maintained in an account by a custodian that satisfies the
requirements of the 1940 Act. The Strategic Income Fund and
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GT GLOBAL INCOME FUNDS
the Portfolio will also establish and maintain such segregated accounts with
respect to its total obligations under any swaps that are not entered into on a
net basis and with respect to any caps or floors that are written by that Fund
or the Portfolio. LGT Asset Management, the Strategic Income Fund and the
Portfolio believe that swaps, caps and floors do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's and the Portfolio's borrowing restrictions. The Strategic
Income Fund and the Portfolio will not enter into any swap, cap, floor, collar
or other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's ("S&P") or has an equivalent rating from a
nationally recognized statistical rating organization or is determined to be of
equivalent credit quality by LGT Asset Management. If a counterparty defaults,
the Strategic Income Fund or the Portfolio may have contractual remedies
pursuant to the agreements related to the transactions. The swap market has
grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps, floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed and, for that reason, they are
less liquid than swaps.
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RISK FACTORS
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SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. The Strategic Income Fund
and the Portfolio may invest in debt securities in emerging markets. Investing
in securities in emerging countries may entail greater risks than investing in
debt securities in developed countries. These risks include (i) less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price volatility; (iii) certain
national policies which may restrict the Strategic Income Fund's and the
Portfolio's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; and (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, either a
Fund or the Portfolio could lose its entire investment in any such country.
An investment in the Strategic Income Fund and the Portfolio is subject to the
political and economic risks associated with investments in emerging markets.
Even though opportunities for investment may exist in emerging markets, any
change in the leadership or policies of the governments of those countries or in
the leadership or policies of any other government which exercises a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and thereby
eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of emerging market countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund and the Portfolio.
The claims of property owners against those governments were never finally
settled. There can be no assurance that any property represented by securities
purchased by the Fund or the Portfolio will not also be expropriated,
nationalized, or otherwise confiscated. If such confiscation were to occur, the
Fund or the Portfolio could lose a substantial portion of its investments in
such countries.
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The Fund's and the Portfolio's investments would similarly be adversely affected
by exchange control regulation in any of those countries.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund or the 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 the Fund's or the
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 Fund or the
Portfolio invests and adversely affect the value of the Fund's or the
Portfolio's assets.
ILLIQUID SECURITIES. The Government Income Fund may invest up to 10% of its
total assets in securities the disposition of which may be subject to legal or
contractual restrictions or the markets for which may be illiquid. The Strategic
Income Fund and the Portfolio each may invest up to 15% of total assets in
illiquid securities. Securities may be considered illiquid if a Fund or the
Portfolio cannot reasonably expect within seven days to receive approximately
the amount at which the Fund or the Portfolio values such securities. The sale
of illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than will the sale of liquid securities, such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, each Fund and the Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time each Fund and the
Portfolio may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
each Fund and the Portfolio might obtain a less favorable price than prevailed
when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
each Fund and the Portfolio, however, could affect adversely the marketability
of such portfolio securities and each Fund and the Portfolio might be unable to
dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to LGT Asset Management in accordance with
procedures approved by the Company's Board of Directors. LGT Asset Management
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
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GT GLOBAL INCOME FUNDS
security, how offers are solicited and the mechanics of transfer). LGT Asset
Management will monitor the liquidity of securities held by each Fund and the
Portfolio and report periodically on such decisions to the Company's Board of
Directors. Moreover, as noted in the Prospectus, certain securities, such as
those subject to repatriation restrictions of more than seven days, will
generally be treated as illiquid.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Government Income Fund,
the Strategic Income Fund or the Portfolio. These restrictions or controls may
at times limit or preclude investment in certain securities and may increase the
cost and expenses of a Fund or 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. The
Government Income Fund, the Strategic Income Fund or the 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 the Government
Income Fund, the Strategic Income Fund or the 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 the
Government Income Fund, the Strategic Income Fund and the 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, LGT Asset Management will take appropriate steps to evaluate the
proposed investment, which may include on-site inspection of the issuer,
interviews with its management and consultations with accountants, bankers and
other specialists. There is substantially less publicly available information
about foreign companies than there are reports and ratings published about U.S.
companies and the U.S. Government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Funds and the Portfolio, under normal
circumstances, will invest substantial portions of their 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 each Fund's and the 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 each Fund's and the Portfolio's
holdings of securities and cash denominated in such currency and, therefore,
will cause an overall decline in the Fund's and the Portfolio's net asset value
and any net investment income and capital gains derived from such securities to
be distributed in U.S. dollars to shareholders of the Fund and the Portfolio.
Moreover, if the value of the foreign currencies in which a Fund receives its
income declines relative to the U.S. dollar between the receipt of the income
and the making of Fund distributions, the Fund may be required to liquidate
securities in order to make distributions if the Fund has insufficient cash in
U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries, and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Funds and the Portfolio value their assets daily in terms of U.S.
dollars, the Funds and the Portfolio do not intend to convert holdings of
foreign currencies into U.S. dollars on a daily basis. The Funds will do so from
time to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they are buying and
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GT GLOBAL INCOME FUNDS
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to a Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to 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 U.S., 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 a Fund or the Portfolio are
uninvested and no return is earned thereon. The inability of a Fund or the
Portfolio to make intended security purchases due to settlement problems could
cause it to miss attractive opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund or
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Fund or the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser. LGT Asset Management will
consider such difficulties when determining the allocation of each Fund's or the
Portfolio's assets, although LGT Asset Management does not believe that such
difficulties will have a material adverse effect on the Funds' or the
Portfolio's portfolio trading activities.
The Funds and the Portfolio may use foreign custodians, which may involve risks
in addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' and the Portfolio's investments and
(iii) possible difficulties in obtaining and enforcing judgments against such
custodians.
WITHHOLDING TAXES. Each Fund's and the Portfolio's net investment income
from foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing the Fund's and the 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,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and
the United Kingdom) eliminated certain import tariffs and quotas and other trade
barriers with respect to one another over the past several years. LGT Asset
Management 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 the Funds or the Portfolio.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by a Fund or the Portfolio in Japan means that that Fund or the
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.
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GT GLOBAL INCOME FUNDS
INVESTMENT LIMITATIONS
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Each Fund and the Portfolio has adopted the following investment limitations as
fundamental policies which may not be changed without approval by the holders of
the lesser of (i) 67% of that Fund's shares or the total beneficial interests of
the Portfolio represented at a meeting at which more than 50% of the outstanding
shares of the Fund or the total beneficial interests of the Portfolio are
represented, or (ii) more than 50% of the outstanding shares of the Fund or the
total beneficial interests of the Portfolio. Whenever the High Income Fund is
requested to vote on a change in the investment limitations of the Portfolio,
the Fund will hold a meeting of its shareholders and will cast its votes as
instructed by its shareholders.
GOVERNMENT INCOME FUND
The Government Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information and subject to (14) below;
(4) Acquire securities subject to restrictions on disposition of
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase over-the-counter options or hold assets set aside to cover
over-the-counter options written by a Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of
the Fund's total assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(8) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (14) below;
(9) Borrow money, except from banks for temporary or emergency purposes
not in excess of 30% of the value of the Fund's total assets. The Fund will
not purchase securities while such borrowings are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will reduce, within three days (excluding Sundays
and holidays), the amount of its borrowings in order to provide for the 300%
asset coverage;
(10) 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;
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GT GLOBAL INCOME FUNDS
(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(12) 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;
(13) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(14) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Government Income Fund, are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors without shareholder approval. The Fund may not: (1) borrow
money to purchase securities; and (2) invest in securities of an issuer if the
investment would cause the Fund to own more than 10% of any class of securities
of any one issuer.
STRATEGIC INCOME FUND
The Strategic Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund) except that this limitation shall not apply to securities issued
or guaranteed as to principal and interest by the U.S. Government or any of
its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund);
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information and subject to (13) below;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(5) Make loans, except that the Fund may invest in loans and
participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (13) below;
(8) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). This restriction shall not prevent the Fund from
entering into reverse repurchase agreements and engaging in "roll"
transactions, provided that reverse repurchase agreements, "roll"
transactions and any other transactions constituting borrowing by the Fund
may not exceed one-third of the Fund's total assets. In the event that the
asset coverage for the Fund's borrowings falls below 300%, the Fund will
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage. Transactions
involving options, futures contracts, options on futures contracts and
forward currency contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;
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GT GLOBAL INCOME FUNDS
(9) 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;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(11) 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 (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives, policies, and limitations as
the Fund);
(12) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(13) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies are not fundamental policies and may be
changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in
securities of an issuer if the investment would cause the Fund to own more
than 10% of any class of securities of any one issuer (provided, however,
that the Fund may invest all of its investable assets in an open-end
management investment company with substantially the same investment
objectives, policies, and limitations as the Fund.); and
(3) Invest more than 10% of its total assets in shares of other
investment companies and 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 (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives, policies, and
limitations as the Fund).
HIGH INCOME FUND AND GLOBAL HIGH INCOME PORTFOLIO
The High Income Fund and the Portfolio each may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund) except that this
limitation shall not apply to securities issued or guaranteed as to
principal and interest by the U.S. Government or any of its agencies or
instrumentalities;
(2) Purchase or sell real estate, including real estate limited
partnerships, provided that the Fund and the Portfolio may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund and the 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
transactions in foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund and the
Portfolio may be deemed an underwriter under federal or state securities
laws;
(5) Make loans, except that the Fund and the Portfolio may invest in
loans and participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund and the
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
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GT GLOBAL INCOME FUNDS
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund and the Portfolio may make deposits of
margin in connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's or the Portfolio's
total assets (including the amount borrowed), less all liabilities and
indebtedness (other than borrowing). This restriction shall not prevent the
Fund or the Portfolio from entering into reverse repurchase agreements and
engaging in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the Fund or the Portfolio may not exceed one-third of the
Fund's or the Portfolio's respective total assets. In the event that the
asset coverage for the Fund's or the Portfolio's borrowings falls below
300%, the Fund or the Portfolio will reduce, within three days (excluding
Sundays and holidays), the amount of its borrowings in order to provide for
300% asset coverage. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's or the
Portfolio's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund or the Portfolio may
invest in securities of companies that engage in these activities; or
(10) With respect to 50% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer (provided, however, that the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objectives as the
Fund).
For purposes of the Fund's and the Portfolio's concentration policy contained in
limitation (1) above, the Fund and the Portfolio intend to comply with the SEC
staff positions that securities issued or guaranteed as to principal and
interest by any single foreign government or any supranational organizations in
the aggregate are considered to be securities of issuers in the same industry.
The following investment policies are not fundamental policies and may be
changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund and the Portfolio each may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund or the Portfolio to own more than 10% of any class of securities of any
one issuer (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(3) Purchase or retain the securities of any issuer, if, to the Fund's
or the Portfolio's knowledge, one or more of the officers or Directors of
the Company, the Fund's or the Portfolio's investment adviser, or
distributor, each own beneficially more than 1/2 of 1% of the securities of
such issuer and together own beneficially more than 5% of the securities of
such issuer;
(4) Enter into a futures contract, an option on a futures contract or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for BONA FIDE hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's or the Portfolio's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund or the Portfolio has entered into;
(5) 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 (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund); or
(6) Invest more than 10% of its total assets in shares of other
investment companies and 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 (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives as the Fund).
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GT GLOBAL INCOME FUNDS
The Portfolio will comply with all state securities laws in any states in which
the shares of the High Income Fund or any other investor, if any, in the
Portfolio are registered for sale. Investors should refer to the Prospectus for
further information with respect to each Fund's investment objectives, which may
not be changed without the approval of the shareholders and the Portfolio's
investment objectives, which may be changed without the approval of investors in
the Portfolio, and other investment policies and techniques, which may be
changed without shareholder approval.
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EXECUTION OF PORTFOLIO
TRANSACTIONS
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Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Government Income and
Strategic Income Funds' and the Portfolio's portfolio transactions and the
selection of broker/dealers that execute such transactions on behalf of these
Funds and the Portfolio. In executing portfolio transactions, LGT Asset
Management seeks the best net results for the Government Income and Strategic
Income Funds and the 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 LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Funds and the Portfolio may
engage in soft dollar arrangements for research services, as described below,
neither the Funds nor the Portfolio has any obligation to deal with any
broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
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 the interests of the Funds and the Portfolio, LGT Asset
Management may select brokers to execute the Funds' and the Portfolio's
portfolio transactions on the basis of the research and brokerage services they
provide to LGT Asset Management for its use in managing the Funds and the
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 brokers are in addition to, and not in
lieu of, the services required to be performed by LGT Asset Management under the
Management Contract (defined below). A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that LGT Asset Management determines in good
faith that such commission is reasonable in terms either of that particular
transaction or the overall responsibility of LGT Asset Management to the Funds
and the Portfolio and its other clients and that the total commissions paid by
the Funds and the Portfolio will be reasonable in relation to the benefits
received by the Funds and the Portfolio over the long term. Research services
may also be received from dealers who execute Fund transactions in over-
the-counter markets.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Funds or the Portfolio toward payment of the
Funds' or the Portfolio's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and the Portfolio and for other investment
accounts managed by LGT Asset Management are made independently of each other in
light of differing conditions. However, the same investment decision
occasionally may be made for two or more of such accounts, including one or both
Funds and the 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 the Funds and the Portfolio are concerned, in other cases LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Funds and the Portfolio.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL INCOME FUNDS
Under a policy adopted by the Company's Board of Directors and the Portfolio's
Board of Trustees, and subject to the policy of obtaining the best net results,
LGT Asset Management may consider a broker/dealer's sale of the shares of the
Funds and the other funds for which LGT Asset Management serves as investment
manager in selecting brokers and dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other funds.
Each Fund and the Portfolio contemplates purchasing most foreign equity
securities in over-the-counter markets or stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held by a Fund and the Portfolio in the form of
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
Continental Depository Receipts ("CDRs") or European Depository Receipts
("EDRs") or securities convertible into foreign equity securities. ADRs, ADSs,
CDRs and EDRs may be listed on stock exchanges, or traded in the
over-the-counter markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which the Funds and the Portfolio may invest generally are
traded in the over-the-counter markets.
The Funds and the Portfolio contemplate that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted through
certain companies that are members of the Liechtenstein Global Trust. The
Company's Board of Directors has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations. For the fiscal years
ended October 31, 1995, 1994 and 1993, the Portfolio paid aggregate brokerage
commissions of $0, $24,000, and $2,000, respectively. For the fiscal years ended
October 31, 1995, 1994 and 1993, the Government Income Fund paid aggregate
brokerage commissions of $0, $92,397, and $353,696, respectively. For the fiscal
years ended October 31, 1995, 1994, and 1993, the Strategic Income Fund paid
aggregate brokerage commissions of $0, $134,876, and $6,511, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund and the Portfolio engages in portfolio trading when LGT Asset
Management concludes that the sale of a security owned by a Fund and the
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 Fund's and the Portfolio's
investment objectives, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Funds and the Portfolio generally do not intend to trade for
short-term profits, the securities in each Fund's and the Portfolio's portfolio
will be sold whenever LGT Asset Management believes it is appropriate to do so,
without regard to the length of time a particular security may have been held.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that a Fund or the Portfolio will bear directly, and
could result in the realization of net capital gains that would be taxable when
distributed to shareholders. The portfolio turnover rates for the Government
Income Fund, Strategic Income Fund and the Portfolio the last two fiscal years
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Government Income Fund............................................................... 385% 625%
Strategic Income Fund................................................................ 238% 583%
High Income Portfolio................................................................ 213% 178%
</TABLE>
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL INCOME FUNDS
DIRECTORS, TRUSTEES AND
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The term "Directors" as used below refers to the Company's Directors and the
Portfolio's Trustees collectively. The Company's Directors and executive
officers and the Portfolio's Trustees and executive officers are listed below.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust Limited (holding company of the various
Director, Chairman of the Board and international GT companies) since 1990; President of the Asset Management Division,
President Liechtenstein Global Trust Limited, since 1995; Director and President of LGT Asset
50 California Street Management Holdings, Inc. ("LGT Asset Management Holdings") since 1988; Director and
San Francisco, CA 94111 President of LGT Asset Management since 1989; Director of GT Global since 1987; President
of GT Global from 1987 to 1995; Director of GT Services since 1990; President of GT
Services from 1990 to 1995; Director of G.T. Global Insurance Agency, Inc. ("G.T.
Insurance") since 1992; and President of G.T. Insurance Agency from 1992 to 1995. Mr.
Minella also is a director or trustee of each of the other investment companies registered
under the 1940 Act that is managed or administered by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); Trustee, Seattle Art Museum. Mr. Bayley also is a
2 Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94118 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989; Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987;
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliations with the LGT companies.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL INCOME FUNDS
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management
Vice President and Secretary Holdings, LGT Asset Management, GT Global, GT Services and G.T.
50 California Street Insurance since February 1996. Senior Vice President, General Counsel
San Francisco, CA 94111 and Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Global, GT Services and G.T. Insurance from May, 1994 to February 1996.
Mr. Lee was the Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October, 1991 through May, 1994. For more than five years
prior to October, 1991, he was a shareholder in the law firm of Godfrey
& Kahn, S.C., Milwaukee, Wisconsin.
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995, Senior Vice
Vice President and Chief President - Finance and Administration of GT Global, GT Services and
Financial Officer G.T. Insurance. Senior Vice President - Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President - Finance of G.T. Insurance from 1992 to 1994; and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President of Mutual Fund Accounting at LGT Asset Management since
Vice President and Chief 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Accounting Officer from 1989-1992.
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services, and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management Holdings, LGT Asset Management,
San Francisco, CA 94111 GT Global and GT Services since 1991. From 1989 to 1991, Mr. Guarino was
an attorney at The Dreyfus Corporation. Prior thereto, he was associated
with Colonial Management Associates, Inc.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services, and G.T. Insurance since February 1996.
50 California Street Assistant General Counsel of LGT Asset Management since January 1995.
San Francisco, CA 94111 From 1993 to 1994, Mr. Thelander was an associate at Kirkpatrick &
Lockhart LLP (a law firm). Prior thereto, he was an attorney with the
U.S. Securities and Exchange Commission.
</TABLE>
The Board has a Nominating and Audit Committee, composed of Miss Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Directors, reviewing audits of the Company and its funds and
recommending firms to serve as independent auditors of the Company. Each of the
Directors and officers of the Company is also a Director and officer of G.T.
Investment Portfolios, Inc., and 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 and Growth Portfolio, which also are registered investment
companies managed by LGT Asset Management. Each of the individuals listed above
serves as a Director or officer of the Company as well as a Trustee or officer
of the Portfolio. Each Director and Officer serves in total as a Director and or
Trustee and Officer, respectively, of 10 registered investment companies with 40
series managed or administered by LGT Asset Management. Each Director or Trustee
who is not a director, officer or employee of LGT Asset Management or any
affiliated company is paid aggregate fees of $5,000 per annum, plus $300 per
Fund for each meeting of the Board attended, and reimburses travel and other
expenses incurred in connection with attendance at such meetings. Other
Directors and Officers receive no compensation or expense reimbursement from the
Company. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley, who are not directors, officers, or employees of
LGT Asset Management or any affiliated company, received total compensation of
$36,705.30, $34,230.22, $36,755.58 and $33,706.85, respectively, from the
Company for their services as Directors. For the fiscal year ended October 31,
1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $92,176.78, $87,868.84, $92,260.90 and $86,957.55, respectively,
from the 40 GT Global Mutual 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 February 22, 1996, 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 or of all the
Company's Funds in the aggregate.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL INCOME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
LGT Asset Management serves as the Government Income Fund's and the Strategic
Income Fund's investment manager and administrator under an Investment
Management and Administration Contract between the Company and LGT Asset
Management ("Company Management Contract") and as the Portfolio's investment
manager and administrator under an Investment Management and Administration
Contract between the Portfolio and LGT Asset Management ("Portfolio Management
Contract") (collectively, "Management Contracts"). LGT Asset Management serves
as the High Income Fund's administrator under an Administration Contract
("Administration Contract") between the Company and LGT Asset Management. The
Administration Contract will not be deemed an advisory contract, as defined
under the 1940 Act. As investment manager and administrator, LGT Asset
Management makes all investment decisions for the Government Income Fund, the
Strategic Income Fund and the Portfolio and as administrator, LGT Asset
Management administers each Fund's and the Portfolio's affairs. Among other
things, LGT Asset Management furnishes the services and pays the compensation
and travel expenses of persons who perform the executive, administrative,
clerical and bookkeeping functions of the Company, the Funds, and the Portfolio
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Government Income Fund and the Strategic
Income Fund each pay LGT Asset Management investment management and
administration fees, based on the Funds' average daily net assets computed daily
and paid monthly, at the annualized rate of .725% on the first $500 million,
.70% on the next 1 billion, .675% on the next $1 billion, and .65% on amounts
thereafter. The High Income Fund pays administration fees, computed daily and
paid monthly, to LGT Asset Management at the annualized rate of 0.25% of the
Fund's average daily net assets. In addition, the High Income Fund bears a pro
rata portion of the investment management and administration fee paid by the
Portfolio to LGT Asset Management. The Portfolio pays such fees, also computed
daily and paid monthly at the annualized rate of .475% on the first $500
million, .45% on the next $1 billion, .425% on the next $1 billion, and .40% on
amounts thereafter of its average daily net assets, plus 2% of the Portfolio's
total investment income as stated in the Portfolio's Statement of Operations,
calculated in accordance with generally accepted accounting principles, adjusted
daily for currency revaluations, on a marked to market basis, of the Portfolio's
assets; provided, however, that during any fiscal year this amount shall not
exceed 2% of the Portfolio's total investment income calculated in accordance
with generally accepted accounting principles.
The Management Contracts may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors or by the vote of a majority of the Fund's or the
Portfolio's outstanding voting securities (as defined in the 1940 Act), and (ii)
a majority of Directors or Trustees who are not parties to the Management
Contract or the Administration Contract, as applicable, 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
Contracts provide that with respect to the Government Income Fund, the Strategic
Income Fund and the Portfolio, and the Administration Contract provides that
with respect to the High Income Fund, either the Company, the Portfolio or LGT
Asset Management may terminate the Contract without penalty upon sixty days'
written notice to the other party. The Management Contracts and the
Administration Contract terminate automatically in the event of their assignment
(as defined in the 1940 Act).
Under the Management Contracts, LGT Asset Management has agreed to waive its
investment management and administration fees from a Fund and to reimburse such
Fund to the extent necessary to assure that the Fund's annual expenses
(exclusive of brokerage commissions, organizational expenses, taxes, interest,
distribution-related expenses, certain expenses attributable to investing
outside the U.S. and extraordinary expenses) do not exceed the most stringent
expense limitations prescribed by any state in which the Fund's shares are
offered for sale. As applied to the High Income Fund and the Portfolio, LGT
Asset Management has agreed to reduce the investment management and
administration fee payable by the Portfolio by the amount by which the ordinary
operating expenses (exclusive of organization expenses, interest, taxes,
distribution-related expenses and extraordinary expenses) of the Portfolio for
any fiscal year borne by the High Income Fund, together with the direct ordinary
operating expenses (exclusive of brokerage commission, organization expenses,
taxes, interest, distribution-related expenses and extraordinary expenses) of
the High Income Fund, exceeds the most stringent expense limitations prescribed
by any state in which the shares of the High Income Fund are
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL INCOME FUNDS
offered for sale. Currently, the most restrictive applicable limitation provides
that a 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, LGT Asset Management
and GT Global voluntarily have undertaken to limit the expenses of the Class A
shares and the Class B shares of the Government Income Fund and the Strategic
Income Fund (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the maximum annual level of 1.85% and 2.50% of the
average daily net assets of those respective classes of those Funds during each
fiscal year. The expenses of the Class A shares and Class B shares of the High
Income Fund (and such Fund's pro rata portion of the Portfolio's expenses) would
be limited to the annual level of 2.20% and 2.85% of the average daily net
assets of that Fund's Class A and Class B share. LGT Asset Management has agreed
to reimburse a Fund if the Fund's annual ordinary expenses exceed those
respective levels.
In each of the last three fiscal years the Government Income Fund paid
investment management and administration fees to LGT Asset Management in the
following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 4,946,971
1994....................................................................................................... 6,390,750
1993....................................................................................................... 5,222,537
</TABLE>
In each of the last three fiscal years the Strategic Income Fund paid investment
management and administration fees to LGT Asset Management in the following
amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 4,293,053
1994....................................................................................................... 5,392,542
1993....................................................................................................... 1,568,540
</TABLE>
In each of the last three fiscal years the Portfolio paid investment management
and administration fees to LGT Asset Management in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 2,411,786
1994....................................................................................................... 2,266,420
1993....................................................................................................... 547,543
</TABLE>
In each of the last three fiscal years the High Income Fund paid administration
fees to LGT Asset Management in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 860,884
1994....................................................................................................... 886,795
1993....................................................................................................... 212,294
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Class A and Class B shares are offered continuously through each
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted separate Distribution
Plans for each class of each Fund 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 each Fund under the Plans, as described in the
Prospectus, may not be increased without the approval of the majority of the
outstanding voting securities of that Fund. Each Fund makes no payments to any
party other than GT Global, who is the distributor (principal underwriter) of
each Fund's shares. All expenses for which GT Global is reimbursed under the
Class A Plan will have been incurred within one year of such reimbursement. The
following table discloses payments made by the Government Income Fund and the
Strategic Income Fund to GT Global under the Class A Plan and the Class B Plan
for the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------- ----------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
Government Income Fund............................................................... $1,536,304 $2,500,417
Strategic Income Fund................................................................ $ 746,208 $3,820,587
High Income Fund..................................................................... $ 486,107 $2,048,951
</TABLE>
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
In approving the Plans, the Directors determined that the adoption of the Class
B Plan or continuation of the Class A Plan, as applicable, was in the best
interests of the shareholders of the Funds. Agreements related to the Plan also
must be approved by such vote of the Directors and Qualified Directors as
described above. A plan of distribution substantially similar to the Class A
Plan was approved by the shareholders of each Fund on April 19, 1989 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 for High
Income Fund was approved by LGT Asset Management as initial sole shareholder of
the Class B shares of that Fund on October 21, 1992. The Class B Plan took
effect on October 22, 1992.
Each Plan requires that, at least quarterly, the Directors will 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 Prospectuses, GT Global collects sales charges on sales of
Class A shares of the Funds, retains certain amounts of such charges and
reallows other amounts of such charges to broker/dealers who sell shares.
The following tables reviews the extent of such activity during the last three
fiscal years under a sales structure substantially similar to the current Class
A structure:
YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Government Income Fund...................................................... $ 305,067 $ 58,490 $ 246,577
Strategic Income Fund....................................................... 399,242 68,458 330,784
High Income Fund............................................................ 537,880 67,403 470,477
</TABLE>
YEAR ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Government Income Fund...................................................... $ 2,518,304 $ 169,742 $ 2,348,562
Strategic Income Fund....................................................... 3,565,247 732,755 2,832,492
High Income Fund............................................................ 1,888,649 330,237 1,558,412
</TABLE>
YEAR ENDED OCTOBER 31, 1993
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Government Income Fund...................................................... $ 4,074,000 $ 196,160 $ 3,878,840
Strategic Income Fund....................................................... 4,071,000 0 4,071,000
High Income Fund............................................................ 1,584,000 211,360 1,372,640
</TABLE>
GT Global receives no compensation or reimbursements relating to its
distribution efforts with respect to Class A shares other than as described
above. GT Global receives any contingent deferred sales charges payable with
respect to redemptions of Class B shares. The following table discloses the
amount of CDSCs collected by GT Global with regard to the GT Global Income Funds
for the periods shown.
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
CDSCS
YEAR ENDED OCTOBER 31, COLLECTED
- ----------------------------------------------------------------------------------- -------------
<S> <C>
1995........................................................................... $ 1,540,013
1994........................................................................... 809,221
1993........................................................................... 104,329
</TABLE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CDSCS
YEAR ENDED OCTOBER 31, COLLECTED
- ----------------------------------------------------------------------------------- -------------
<S> <C>
1995........................................................................... $ 2,355,668
1994........................................................................... 1,084,779
1993........................................................................... 163,669
</TABLE>
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
<TABLE>
<CAPTION>
CDSCS
YEAR ENDED OCTOBER 31, COLLECTED
- ----------------------------------------------------------------------------------- -------------
<S> <C>
1995........................................................................... $ 1,276,245
1994........................................................................... 990,675
1993........................................................................... 113,510
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by each
Fund, to perform shareholder servicing, reporting and general transfer agent
functions for each Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent also is reimbursed
by each Fund, for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationery and office supplies.
LGT Asset Management also serves as each Fund's pricing and accounting agent. As
of October 31, 1995, the Government Income Fund, Strategic Income Fund and High
Income Fund paid LGT Asset Management fees of $40,218, $34,980 and $22,563,
respectively, for such accounting services.
EXPENSES OF THE FUNDS
The Fund pays all expenses not assumed by LGT Asset Management, GT Global and
other agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agent and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared by the 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 services performed and relative applicability to each Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of 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
each Fund and the Portfolio generally are higher than the comparable expenses of
such other funds.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing business
time) on each business day the NYSE is open for business. Currently, the NYSE is
closed on weekends and on certain days relating to the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
Each Fund's and the Portfolio's portfolio securities and other assets are valued
as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges are valued at the last sale price on the exchange 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 LGT Asset
Management to be the primary market.
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
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term debt investments
are amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by a Fund or the
Portfolio are valued at their last bid price in the case of listed options or,
in the case of OTC options, at the average of the last bid prices obtained from
dealers, unless a quotation from only one dealer is available, in which case
only that dealer's price will be used. When market quotations for futures and
options on futures held by a Fund or the Portfolio are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also are generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's or the Portfolio's total assets.
The Fund's or the Portfolio's liabilities, including accruals for expenses, are
deducted from its total assets. Once the total value of a Fund's or the
Portfolio's net assets is so determined, that value is then divided by the total
number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemedto provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern or Latin American securities trading may not take place on
all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. Consequently, the calculation of the Funds' respective net
asset values therefore may not take place
Statement of Additional Information Page 31
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GT GLOBAL INCOME FUNDS
contemporaneously with the determination of the prices of securities held by the
Funds. Events affecting the values of portfolio securities that occur between
the time their prices are determined and the close of regular trading on the
NYSE will not be reflected in the Funds' net asset values unless LGT Asset
Management, under the supervision of the Company's Board of Directors,
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 cannot purchase or redeem shares of the Fund.
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INFORMATION RELATING TO SALES AND
REDEMPTIONS
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PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectuses. Payment, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectuses.
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 assure 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 or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT 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 GT Global within 20 business days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that 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 restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Funds' Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether the investment will be in
Class A shares or Class B shares and send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account.
Statement of Additional Information Page 32
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GT GLOBAL INCOME FUNDS
The necessary forms are provided at the back of the prospectus. Providing that
an investor's bank accepts the Bank Authorization Form, investment amounts will
be drawn on the designated dates (monthly on the 25th day or beginning quarterly
on the 25th day of the month the investor first selects) in order to purchase
full and fractional shares of a 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, a stop payment order or the account is
closed, the AIP may be discontinued, and any share purchase made upon deposit of
such check may be cancelled. Furthermore, the shareholder will be liable for any
loss incurred by a Fund by reason of such cancellation. Investors should allow
one month for the establishment of an AIP. An AIP may be terminated by the
Transfer Agent or the Funds upon 30 days' written notice or by the participant,
at any time, without penalty, upon written notice to the pertinent Fund or the
Transfer Agent.
EXCHANGES BETWEEN FUNDS
Shares of each Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT 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 GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days' prior notice to the shareholders of such Fund and is available
only in states where the exchange may be 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, telex or telegram
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
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution, if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, currently are
borne by the appropriate 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 30 days written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders of a Fund owning Class A or Class B shares with a value of $10,000
or more, may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP, a
shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). 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
Prospectuses). A corporation (or partnership) also must 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 a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that 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 a Fund upon 30 days' written notice or by a shareholder upon
written notice to a Fund or its Transfer Agent. Applications and further details
regarding establishment of a SWP are provided at the back of the Funds'
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC,
Statement of Additional Information Page 33
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GT GLOBAL INCOME FUNDS
which would prohibit the Funds from disposing of their portfolio securities or
in fairly determining the value of their assets, or (3) as the SEC may otherwise
permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future 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
"redemption in kind." Payments of redemption 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 value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
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TAXES
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TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the 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 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 outstanding voting securities of the issuer; 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. The
High Income Fund, as an investor in the 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 that 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 the High Income
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFIC") and other foreign securities by, the Portfolio.
TAXATION OF THE PORTFOLIO -- GENERAL
The Portfolio is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership." As a result, the Portfolio is not subject
to federal income tax; instead, the High Income Fund, as an investor in the
Portfolio, is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses,
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
deductions and credits, without regard to whether it has received any cash
distributions from the Portfolio. The Portfolio also is not subject to New York
income or franchise tax.
Because, as noted above, the High Income Fund 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 that Fund satisfies the
requirements to qualify as a RIC, the Portfolio intends to conduct its
operations so that the High Income Fund will be able to satisfy all those
requirements.
Distributions to the High Income Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in that 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 that
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of that
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The High Income Fund's basis for its interest in the
Portfolio generally will equal the amount of cash and the basis of any property
that Fund invests in the Portfolio, increased by that 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 that Fund and (b) that Fund's
share of the Portfolio's losses.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
For purposes of the following discussion, "Investor Fund" means the Government
Income Fund, the Strategic Income Fund or the Portfolio.
FOREIGN TAXES. Interest and dividends received by an Investor Fund may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
foreign taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors. If more than 50%
of the value of a Fund's total assets (taking into account, in the case of the
High Income Fund, its proportionate share of the 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 the High Income Fund, its proportionate
share of these taxes paid by the 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 the High Income Fund, its proportionate share of the Portfolio's income)
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Investor Fund 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 the High Income Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of the High Income Fund, by the Portfolio) on the stock of a PFIC or
of any gain on the Fund's (or, in the case of the High Income Fund, the
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 the Fund to the extent that income is distributed to its
shareholders.
If an Investor Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Investor Fund (or, in the case of the Portfolio, the
High Income Fund) will be required to include in income each taxable year its
pro rata share of the QEF's ordinary earnings and net capital gain (the excess
of net long-term capital gain over net short-term capital loss) -- which most
likely would have to be distributed to satisfy the Distribution Requirement and
to avoid imposition of the Excise Tax -- even if those earnings and gain were
not received thereby. In most instances it will be very difficult, if not
impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RIC 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,
Statement of Additional Information Page 35
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GT GLOBAL INCOME FUNDS
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 Investors Funds' use
of hedging transactions, such as selling (writing) and purchasing options and
Futures Contracts and entering into Forward Contracts, involves complex rules
that will determine, for federal income tax purposes, the character and timing
of recognition of the gains and losses an Investor Fund realizes in connection
therewith. Income from foreign currencies (except certain gains therefrom that
may be excluded by future regulations), and income from transactions in options,
Futures and Forward Contracts derived by an Investor Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Investor Fund (or, in
the case of the Portfolio, the High Income Fund). However, income from the
disposition by an Investor Fund of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that
Investor Fund (or, in the case of the Portfolio, the High Income Fund) if they
are held for less than three months. Income from the disposition by an Investor
Fund 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, also will be subject to the Short-Short Limitation for
that Investor Fund (or, in the case of the Portfolio, the (or options and
Futures with respect thereto) Income Fund) if they are held for less than three
months.
If an Investor Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Investor Fund (or,
in the case of the Portfolio, the High Income 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 Investor Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, an Investor Fund 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
Investor Fund (or, in the case of the Portfolio, the High Income Fund) to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by an Investor Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains or
losses). 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 Investor Fund 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 the 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 are
subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") 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
Statement of Additional Information Page 36
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GT GLOBAL INCOME FUNDS
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 Portfolio.
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.
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ADDITIONAL INFORMATION
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LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz and Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) in Tokyo; LGT
Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd.
located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of each Fund's and the
Portfolio's assets. State Street is authorized to establish and has established
separate accounts in foreign currencies and to cause securities of the Funds and
the Portfolio to be held in separate accounts outside the United States in the
custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' and the Portfolio's independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston Massachusetts 02109. Coopers & Lybrand
L.L.P. conducts audits of each Fund's and the Portfolio's financial statements,
assists in the preparation of the Funds' and the Portfolio's federal and state
income tax returns and consults with the Company, the Funds and the Portfolio as
to matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Funds and the Portfolio included in this
Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P., as stated in their opinion appearing herein and are included in reliance
upon such opinion given upon the authority of said firm as experts in accounting
and auditing.
USE OF NAME
LGT Asset Management has granted the Funds and the Portfolio the right to use
the "GT" name and "GT Global" and has reserved the right to withdraw its consent
to the use of such names by the Company, the Funds and/or the Portfolio at any
time, or to grant the use of such names to any other company.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
A Fund's "Standardized Return", as referred to in the Prospectuses (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A, Class B and Advisor Class 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 with respect to
Class A shares computations made in accordance with this formula: (1) for Class
A shares, deduction of the maximum sales charge with respect to Class B shares
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 Funds' Standardized Returns, for their Class A shares, stated as average
annual total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 4.03% (1.84)% (2.07)%
October 31, 1990 through October 31, 1995................................... 6.09% 7.59% N/A
March 29, 1988 through October 31, 1995..................................... 6.68% 7.23% N/A
October 22, 1992 through October 31, 1995................................... N/A N/A 9.50 %
</TABLE>
The Funds' Standardized Returns for their Class B shares, which were first
offered on October 22, 1992, stated as average annual total returns, at October
31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 3.22% (2.26)% (2.59)%
October 22, 1992 through October 31, 1995................................... 5.21% 6.55% 9.99%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Funds 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 Funds'
Non-Standardized Returns for their Class A shares, stated as aggregate total
returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 9.22% 3.06% 2.81%
October 31, 1990 through October 31, 1995................................... 7.13% 8.64% N/A
March 29, 1988 through October 31, 1995..................................... 71.52% 78.41% N/A
October 22, 1992 through October 31, 1995................................... N/A N/A 38.15 %
</TABLE>
The Funds' Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as aggregate total returns, at October 31,
1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 8.22% 2.48% 2.07%
October 22, 1992 through October 31, 1995................................... 18.40% 22.97% 35.37%
</TABLE>
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
The Funds' Non-Standardized Returns for the Funds' Class A shares stated as
average annual total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 9.22% 3.06% 2.81%
October 31, 1990 through October 31, 1995................................... 7.13% 8.64% N/A
March 29, 1988 through October 31, 1995..................................... 7.36% 7.92% N/A
October 22, 1992 through October 31, 1995................................... N/A N/A 11.28 %
</TABLE>
The Funds' Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as average annual total returns, at October
31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 8.22% 2.48% 2.07%
October 22, 1992 through October 31, 1995................................... 5.74% 7.08% 10.53%
</TABLE>
Current yield ("YIELD"), which is calculated separately for Class A and Class B
shares of each fund, is computed by dividing the difference between dividends
and interest earned during a one-month period ("a") and expenses accrued for the
period (net of reimbursements) ("b") by the product of the average daily number
of shares outstanding during the period that were entitled to receive dividends
("c") and the maximum offering price per share on the last day of the period
("d") according to the following formula as required by the Securities and
Exchange Commission:
<TABLE>
<S> <C> <C> <C> <C> <C>
a-b
YIELD = 2 ( -- + 1 ) (6) -1
cd
</TABLE>
The current yields of the Class A shares of the Government Income Fund,
Strategic Income Fund and the High Income Fund for the one month period ended
October 31, 1995, were 7.27%, 11.63% and 12.98%, respectively. The current
yields of the Class B shares of Government Income Fund, Strategic Income Fund
and High Income Fund for the one month period ended October 31, 1995 were 6.44%,
11.55%, and 12.95%, respectively.
As of October 22, 1992, the investment objectives and policies of the Strategic
Income Fund were changed to high current income, primarily, and capital
appreciation, secondarily. Prior to October 22, 1992, the Strategic Income Fund
operated as the GT Global Bond Fund and had investment objectives which sought
primarily, capital appreciation and moderate current income, secondarily. The
total returns and yield for the Strategic Income Fund were primarily achieved
under the Strategic Income Fund's prior investment objectives.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, as amended, on account
of the inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
LGT Asset Management, 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 certain
indices relate only to government bonds. Each of these factors will cause the
performance of each Fund to differ from relevant indices.
Each Fund and GT Global, from time to time, may compare the Funds with, but not
limited to, the following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets including the Salomon Brothers
World Government Bond Index, which is a widely used index of ten year
government bonds with remaining maturities greater than one year.
(2) The Lehman Brothers 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
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
agencies of the U.S. Government (excluding mortgage backed securities), and
all public, fixed rate, non-convertible investment grade domestic corporate
debt rated at least Baa by Moody's or BBB by S&P, or, in the case of
nonrated bonds, BBB by Fitch Investors Service (excluding Collateralized
Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar") and/or other companies that rank 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 without such peer group. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of risk-adjusted
performance. Morningstar ratings are calculated from a fund's three, five
and ten year average annual returns with appropriate fee adjustments and a
risk factor that reflects fund performance relative to the three-month U.S.
Treasury bill monthly returns. Ten percent of the funds in an investment
category receive five stars and 22.5% receive four stars. The ratings are
subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 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.
(9) 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 and the Salomon Brothers Brady Bond Index which
measures the total return performance of Brady Bonds issued since March,
1990, and are issued in U.S. dollar denominated instruments.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(13) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on bond and stock markets in developing
countries
(14) J.P. Morgan & Co. Bond Indices, including, among others, the J.P.
Morgan Traded Government Bond Index which is an index composed of liquid
non-U.S. fixed income securities based on market weightings and currency
since 1986.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
(18) Datastream and Worldscope, each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and reports produced by the World Bank and its
affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's Investors Service, Fitch Investors Service, Standard &
Poor's.
(23) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(24) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, 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, GT Global may
use performance rankings, ratings and commentary reported periodically in
national financial publications, included but not limited to, Money Magazine,
Smart Money, Global Finance, EuroMoney, Financial World, Forbes, Fortune,
Business Week, Latin Finance, the Wall Street Journal, Emerging Markets Weekly,
Kiplinger's Guide To Personal Finance, Barron's, The Financial Times, USA Today,
The New York Times, Far Eastern Economic Review, The Economist and Investors
Business Digest. Each Fund may compare its performance to that of other
compilations or indices of comparable quality to those listed above and other
indices which may be developed and made available.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the GT Global Income Funds can be an appropriate investment
for long-term investment goals including but not limited to funding retirement,
paying for education or purchasing a house. The GT Global Income Funds do not
represent a complete investment program and the investors should consider the
Funds as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
Each Fund may compare its performance to that of other compilations or indices
of comparable quality to those listed above which may be developed and made
available in the future. Each Fund may be compared in advertising to
Certificates of Deposit (CDs), the Bank Rate Monitor National Index, an average
of the quoted rates for 100 leading banks and thrifts in ten U.S. cities chosen
to represent the ten largest Consumer Metropolitan statistical areas, or other
investments issued by banks. Each Fund differs from bank investments in several
respects. Each Fund may offer greater liquidity or higher potential returns than
CDs; but unlike CDs, the Fund will have a fluctuating share price and return and
is not FDIC insured.
Each Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, each Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the CPI), and combinations of various capital markets. The
performance of these capital markets is based on the returns of different
indices.
GT Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. Each funds
may also compare performance to that of other compilations or indices that may
be developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
Each Fund may discuss its Quotron number, CUSIP number, and its current
portfolio management team.
From time to time, each Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, each fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, each Fund may quote financial
or business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
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. 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 GT 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.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can 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.
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 potentially lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit-sharing plan, additionally permits the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. 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.
The major types of investment risk are market risk, industry risk, credit risk,
interest rate risk and inflation risk. Market risk entails a change in value of
a security due to market uncertainty. Industry risk can be described as the
market risk associated with companies engaged in a similar business.
The next two risks, credit and interest rate risk, more often are associated
with fixed income investing. Credit risk refers to the creditworthiness of an
issuer of debt securities and its ability to pay interest and repay the
principal value of the bond. Interest rate risk has two components. When
interest rates rise or fall the value of the security generally will move
correspondingly in the opposite direction. Further, the longer the maturity the
greater the impact on the bond's value.
Finally, 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.
From time to time, the Funds and GT Global will quote certain data regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including but
not limited to, the economic and financial data of such financial organizations
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 Industry
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, GT Guide
to World Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World.
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, industry or market: International Finance
Corporation, GT Guide to World Equity Markets, Salomon Brothers Inc. and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset Management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE LGT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the LGT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee, which sets broad guidelines for asset
allocation and currency management, based on LGT Asset Management'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.
In addition, the GT Global Strategic Income Fund and the GT Global High Income
Fund, from time to time, may quote yields and total returns of representative
debt instruments from emerging market countries in its advertising and sales
literature.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
LGT Asset Management has identified six phases to track the progress of
developing economies.
In addition, LGT Asset Management focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL INCOME FUNDS
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991, to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the 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 edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear somewhat
greater.
A -- Upper-medium-grade-obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- 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 that are not
rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic ratings
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
STANDARD & POOR'S RATINGS SERVICES ("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 -- High grade. Very strong capacity to pay interest and repay
principal and differ from AAA issues only in a small degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
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 indefinable 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 which 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.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest 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. The "D" rating also will be used upon 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 rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designations "Prime-1" and "Prime-2" to indicate
commercial paper having the highest capacity for timely repayment. Issuers (or
supporting institutions) rated Prime-1 have a superior ability to repay senior
short-term debt obligations. Prime-1 repayment capacity generally will be
evidenced by many of the following characteristics:
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL INCOME FUNDS
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protections; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issues rated Prime-2 have a strong ability to repay senior short-term debt
obligations. This normally will be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from A-1 for the highest quality obligations to "D" for the lowest. A-1 -- This
highest rating indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus sign (+) designation. A-2 --
Capacity for timely payments on issues with this designation is satisfactory;
however, the relative degree of safety is not as high as for issues designated
"A-1." 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.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of GT Global Government Income Fund, GT Global
Strategic Income Fund, GT Global High Income Fund, and Global High Income
Portfolio as of October 31, 1995 and for the year then ended appear on the
following pages.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Government Income Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Government Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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, 1995 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 Government Income Fund as of October 31, 1995, 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 15, 1995
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (92.2%)
Australia (5.4%)
Australian Government, 7% due 4/15/00 ............... AUD 26,050,000 $ 18,926,518 3.1
New South Wales Treasury, 11.5% due 7/1/99 .......... AUD 16,662,000 13,982,148 2.3
Austria (4.9%)
Republic of Austria, 3.75% due 2/3/09 ............... JPY 2,946,000,000 30,091,224 4.9
Canada (5.1%)
Canadian Government, 8.50% due 3/1/00 ............... CAD 40,580,000 31,859,830 5.1
Denmark (3.9%)
Kingdom of Denmark, 7% due 12/15/04 ................. DKK 140,500,000 24,394,862 3.9
Finland (2.3%)
Finnish Housing Fund, 10.75% due 3/15/02 ............ FIM 53,000,000 14,529,659 2.3
France (7.7%)
French Treasury Bond (BTAN), 7% due 10/12/00 ........ FRF 231,000,000 48,033,446 7.7
Germany (6.8%)
Deutschland Republic, 6.25% due 1/4/24 .............. DEM 67,500,000 42,407,536 6.8
Italy (8.8%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 4/1/05 ................................. ITL 60,500,000,000 35,704,420 5.8
9.50% due 12/1/99 ................................. ITL 31,340,000,000 18,609,601 3.0
New Zealand (2.0%)
New Zealand Government, 10% due 3/15/02 ............. NZD 16,700,000 12,570,834 2.0
South Africa (3.0%)
Republic of South Africa, 11.5% due 5/30/00 ......... ZAR 75,700,000 18,748,024 3.0
Spain (4.0%)
Kingdom of Spain, 10% due 2/28/05 ................... ESP 3,195,000,000 24,918,432 4.0
Sweden (7.6%)
Swedish Government, 13% due 6/15/01 ................. SEK 266,700,000 47,141,592 7.6
United Kingdom (6.3%)
United Kingdom Treasury:
8.5% due 12/7/05 ................................. GBP 12,000,000 19,701,280 3.2
8% due 12/7/15 ................................... GBP 12,500,000 19,521,989 3.1
United States (24.4%)
United States Treasury Note, 7.875% due 11/15/04 .... USD 68,500,000 76,891,250 12.4
United States Treasury Bond, 6.875% due 8/15/25 ..... USD 69,800,000 74,795,097 12.0
------------
Total Government & Government Agency Obligations (cost
$557,951,013) ......................................... 572,827,742
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Supranational Bond (3.9%)
International Bank of Reconstruction & Development,
4.75% due 12/20/04 (cost $25,982,989) ................ JPY 2,156,300,000 $ 24,208,534 3.9
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $583,934,002) ..... 597,036,276 96.1
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (2.1%)
Mexico (2.1%)
Mexican Tesobonos, effective yield 15.73%, due
11/9/95 ............................................ USD 7,000,000 6,975,610 1.1
Mexican Cetes, effective yield 47.60%, due
1/18/96 ............................................ MXN 46,650,000 5,939,357 1.0
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $13,392,083) ......... 12,914,967 2.1
------------ -----
TOTAL INVESTMENTS (cost $597,326,085) ................... 609,951,243 98.2
Other Assets and Liabilities ............................ 11,064,585 1.8
------------ -----
NET ASSETS .............................................. $621,015,828 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $621,015,828.
* For Federal income tax purposes, cost is $598,758,374 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 20,143,317
Unrealized depreciation: (8,950,448)
-------------
Net unrealized appreciation: $ 11,192,869
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ----------------------------------------------------------------------------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks............................................................... 19,179,095 1.42383 11/30/95 $ 249,600
Deutsche Marks............................................................... 12,299,865 1.38974 11/30/95 (137,713)
Deutsche Marks............................................................... 12,196,684 1.41600 11/30/95 92,164
Deutsche Marks............................................................... 12,345,450 1.38179 01/24/96 (174,542)
Deutsche Marks............................................................... 17,621,881 1.39266 01/24/96 (109,654)
Danish Kroner................................................................ 1,830,563 5.77080 11/14/95 97,701
Danish Kroner................................................................ 787,142 5.43400 11/14/95 (4,172)
Spanish Pesetas.............................................................. 1,016,324 122.62500 11/07/95 5,926
Finnish Marks................................................................ 1,179,528 4.23407 12/28/95 (1,369)
French Francs................................................................ 13,368,831 5.14091 11/30/95 648,846
French Francs................................................................ 1,740,086 4.93220 12/04/95 14,285
French Francs................................................................ 4,077,070 4.95845 12/04/95 54,876
Japanese Yen................................................................. 6,134,934 99.25500 11/24/95 (169,030)
Japanese Yen................................................................. 323,729 99.53299 11/24/95 (7,990)
Swedish Krona................................................................ 5,377,185 6.64000 01/05/96 (21,911)
------------- -------------
Total Contracts to Buy (Payable amount $108,941,350)....................... 109,478,367 537,017
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 17.63%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Australian Dollars........................................................... 8,734,032 1.32675 01/18/96 (119,012)
Canadian Dollars............................................................. 13,137,809 1.33941 11/20/95 2,305
Deutsche Marks............................................................... 576,389 1.41720 11/30/95 (4,840)
Danish Kroner................................................................ 14,644,502 5.51880 11/14/95 (148,597)
Danish Kroner................................................................ 1,450,721 5.75380 11/14/95 (73,370)
Spanish Pesetas.............................................................. 6,619,637 120.34000 11/07/95 86,362
Spanish Pesetas.............................................................. 6,931,343 127.61000 11/07/95 (309,605)
Finnish Marks................................................................ 16,513,387 4.35890 12/28/95 (454,290)
French Francs................................................................ 17,786,319 5.06050 11/30/95 (594,342)
French Francs................................................................ 6,711,780 5.12790 11/30/95 (309,549)
French Francs................................................................ 11,283,321 4.95714 11/30/95 (149,636)
French Francs................................................................ 12,097,168 4.90654 12/04/95 (36,340)
French Francs................................................................ 9,218,481 5.07865 12/13/95 (338,169)
French Francs................................................................ 1,205,965 4.93700 12/13/95 (10,908)
French Francs................................................................ 8,385,441 4.95600 12/18/95 (107,170)
French Francs................................................................ 619,295 4.88750 12/18/95 654
Pounds Sterling.............................................................. 1,416,935 0.63710 01/16/96 (4,295)
Pounds Sterling.............................................................. 818,673 0.63623 01/16/96 (1,363)
Pounds Sterling.............................................................. 676,980 0.63355 01/16/96 1,732
Italian Lira................................................................. 5,286,464 1,634.54999 01/11/96 (86,256)
Italian Lira................................................................. 1,915,566 1,609.59999 01/11/96 (2,047)
Italian Lira................................................................. 12,504,077 1,637.27600 01/26/96 (199,585)
Italian Lira................................................................. 12,482,507 1,640.29200 01/26/96 (221,826)
Swedish Krona................................................................ 27,973,362 7.03330 01/05/96 (1,456,649)
Swedish Krona................................................................ 7,612,992 6.80770 01/05/96 (157,280)
------------- -------------
Total Contracts to Sell (Receivable amount $201,909,070)................... 206,603,146 (4,694,076)
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 33.27%
Total Open Forward Foreign Currency Contracts, Net......................... $(4,157,059)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$597,326,085) (Note 1)........................... $ 609,951,243
Interest and interest withholding tax reclaims
receivable....................................... 17,932,615
Receivable for Fund shares sold................... 2,584,411
Receivable for securities sold.................... 700
Cash held as collateral for securities loaned
(Note 1)......................................... 144,235,681
-------------
Total assets.................................... 774,704,650
-------------
Liabilities:
Payable for open forward foreign currency
contracts, net (Note 1).......................... 4,157,059
Payable for Fund shares repurchased............... 3,428,606
Payable for forward foreign currency contracts --
closed (Note 1).................................. 520,441
Payable for investment management and
administration fees (Note 2)..................... 386,836
Payable for service and distribution expenses
(Note 2)......................................... 318,422
Due to custodian.................................. 303,622
Payable for printing and postage expenses......... 137,943
Payable for transfer agent fees (Note 2).......... 93,567
Payable for professional fees..................... 32,987
Payable for custodian fees (Note 1)............... 23,750
Payable for registration and filing fees.......... 22,289
Payable for fund accounting fees (Note 2)......... 13,536
Distribution payable (Note 1)..................... 8,264
Payable for Directors' fees and expenses (Note
2)............................................... 1,662
Other accrued expenses............................ 4,157
Collateral for securities loaned (Note 1)......... 144,235,681
-------------
Total liabilities............................... 153,688,822
-------------
Net assets.......................................... $ 621,015,828
-------------
-------------
Class A:
Net asset value and redemption price per share
($385,403,553 DIVIDED BY 43,758,850 shares
outstanding)....................................... $ 8.81
-------------
-------------
Maximum offering price per share (100/95.25 of
$8.81) *........................................... $ 9.25
-------------
-------------
Class B:+
Net asset value and offering price per share
($235,480,993 DIVIDED BY 26,744,046 shares
outstanding)....................................... $ 8.80
-------------
-------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and
redemption price per share ($131,282 DIVIDED BY
14,914 shares outstanding)......................... $ 8.80
-------------
-------------
Net assets consist of:
Paid in capital (Note 4).......................... $ 758,763,464
Undistributed net investment income............... 1,761,999
Accumulated net realized loss on investments and
foreign currency transactions.................... (148,171,697)
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies..... (3,963,096)
Net unrealized appreciation of investments........ 12,625,158
-------------
Total -- representing net assets applicable to
capital shares outstanding......................... $ 621,015,828
-------------
-------------
<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 52
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of $524).... $57,430,425
-----------
Total investment income................................... 57,430,425
-----------
Expenses:
Investment management and administration fees (Note 2)...... 4,946,971
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,536,304
Class B.................................. 2,500,417 4,036,721
------------
Transfer agent fees (Note 2)................................ 1,094,433
Printing and postage expenses............................... 333,530
Custodian fees (Note 1)..................................... 430,398
Fund accounting fees (Note 2)............................... 175,158
Audit fees.................................................. 60,225
Legal fees.................................................. 28,150
Directors' fees and expenses (Note 2)....................... 18,450
Registration and filing fees................................ 14,457
Insurance expenses.......................................... 8,030
Other expenses.............................................. 9,855
-----------
Total expenses before reductions.......................... 11,156,378
-----------
Expense reductions (Note 1)............................. (218,967)
-----------
Total net expenses........................................ 10,937,411
-----------
Net investment income......................................... 46,493,014
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 21,102,232
Net realized loss on foreign currency
transactions.............................. (25,567,655)
------------
Net realized loss during the year......................... (4,465,423)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ 3,260,081
Net change in unrealized appreciation of
investments............................... 12,089,374
------------
Net unrealized appreciation during the year............... 15,349,455
-----------
Net realized and unrealized gain on investments and foreign
currencies................................................... 10,884,032
-----------
Net increase in net assets resulting from operations.......... $57,377,046
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income...................... $ 46,493,014 $ 59,484,891
Net realized loss on investments and
foreign currency transactions............. (4,465,423) (146,390,203)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... 3,260,081 (5,037,165)
Net change in unrealized appreciation
(depreciation) of investments............. 12,089,374 (996,786)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 57,377,046 (92,939,263)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (29,604,447) (44,148,920)
From net realized gain on investments...... -- (17,627,677)
In excess of net realized gain on
investments............................... -- (35,374,886)
Return of capital.......................... -- (6,291,488)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (15,123,091) (16,256,126)
From net realized gain on investments...... -- (5,517,894)
In excess of net realized gain on
investments............................... -- (11,171,017)
Return of capital.......................... -- (2,097,163)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (3,476) --
----------------- -----------------
Total distributions...................... (44,731,014) (138,485,171)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 359,717,885 544,282,723
Decrease from capital shares repurchased... (515,847,692) (439,631,119)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (156,129,807) 104,651,604
----------------- -----------------
Total decrease in net assets................. (143,483,775) (126,772,830)
Net assets:
Beginning of year.......................... 764,499,603 891,272,433
----------------- -----------------
End of year................................ $ 621,015,828 $ 764,499,603
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1995(D) 1994(D) 1993(D) 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income................. 0.62 0.65 0.74 0.92 0.99
Net realized and unrealized gain
(loss) on investments................ 0.15 (1.52) 1.34 (0.31) (0.07)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) from
investment operations.............. 0.77 (0.87) 2.08 0.61 0.92
----------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income............ (0.59) (0.65) (0.74) (0.83) (1.00)
From net realized gain on
investments.......................... -- (0.27) -- (0.13) (0.09)
In excess of net realized gain on
investments.......................... -- (0.55) -- -- --
Return of capital..................... -- (0.10) -- -- --
From sources other than net investment
income............................... -- -- (0.10) (0.11) --
----------- ----------- ----------- ----------- -----------
Total distributions................. (0.59) (1.57) (0.84) (1.07) (1.09)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total investment return (c)............. 9.22% (8.87)% 21.9% 6.3% 9.4%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 385,404 $ 502,094 $ 708,301 $ 623,387 $ 399,200
Ratio of net investment income to
average net assets..................... 6.98% 6.87% 7.1% 9.0% 9.5%
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.35% 1.33% 1.4% 1.6% 1.6%
Without expense reductions............ 1.38% --%* --%* --%* --%*
Portfolio turnover rate++++............. 385% 625% 495% 351% 326%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
-------------------------------------------------------- CLASS+++
-------------
YEAR ENDED OCTOBER 22, 1992 JUNE 1, 1995
OCTOBER 31, TO TO
------------------------------------- OCTOBER 31, OCTOBER 31,
1995(D) 1994(D) 1993(D) 1992 1995(D)
----------- ----------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.64 $ 11.07 $ 9.83 $ 9.87 $ 8.98
----------- ----------- ----------- ------- -------------
Income from investment operations:
Net investment income................. 0.55 0.59 0.67 0.02 0.26
Net realized and unrealized gain
(loss) on investments................ 0.14 (1.52) 1.34 (0.06) (0.19)
----------- ----------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 0.69 (0.93) 2.01 (0.04) 0.07
----------- ----------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ (0.53) (0.59) (0.67) -- (0.25)
From net realized gain on
investments.......................... -- (0.27) -- -- 0.00
In excess of net realized gain on
investments.......................... -- (0.54) -- -- 0.00
Return of capital..................... -- (0.10) -- -- 0.00
From sources other than net investment
income............................... -- -- (0.10) -- 0.00
----------- ----------- ----------- ------- -------------
Total distributions................. (0.53) (1.50) (0.77) -- (0.25)
----------- ----------- ----------- ------- -------------
Net asset value, end of period.......... $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 8.80
----------- ----------- ----------- ------- -------------
----------- ----------- ----------- ------- -------------
Total investment return (c)............. 8.22% (9.39)% 21.1% (0.4)%(a) 0.83%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 235,481 $ 262,405 $ 182,972 $ 2,624 $ 131
Ratio of net investment income to
average net assets..................... 6.33% 6.22% 6.5% 8.0%(b) 7.33%(b)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 2.00% 1.98% 2.0% 1.9%(b) 1.00%(b)
Without expense reductions............ 2.03% --%* --%* --%* 1.03%(b)
Portfolio turnover rate++++............. 385% 625% 495% 351% 385%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Government Income 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 twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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 earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." The Fund
could be exposed to risk if a counterparty is unable to meet the terms of the
contracts or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
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 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 portfolio 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 Fund may use options to manage its exposure
to the bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a
call or put option is included in the Fund's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund has purchased
expires on the stipulated expiration date, the Fund realizes a loss in the
amount of the cost of the option. If the Fund enters into a closing sale
transaction, the Fund realizes a gain or loss, depending on whether proceeds
from the closing sale transaction are greater or less than the cost of the
option. If the Fund exercises a call option, the cost of the securities acquired
by exercising the call is increased by the premium paid to buy the call. If the
Fund exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the bond market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, securities with an aggregate value of approximately
$135,853,476 were on loan to brokers. The loans were secured by cash collateral
of $144,235,681.
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 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 year ended October
31, 1995, the Fund received $218,967 of income from securities lending which was
used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$161,242,885, of which $145,497,299 expires in 2002, and $15,745,586 expires in
2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) 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.
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 0.725% on the first $500 million of average daily net assets of the
Fund; 0.70% on the next $1 billion; 0.675% on the next $1 billion and
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
0.65% on amounts thereafter. These fees are computed daily and paid monthly, and
are subject to reduction in any year to the extent that the Fund's 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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$58,490 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $56,072 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $1,540,013. 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 1.85%, 2.50%, and 1.50% of the average daily net assets
of the Fund's Class A, Class B, and Advisor Class shares, respectively. If
necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995. the Fund paid fund accounting fees of $40,218 to G.T. Capital.
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 60
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $1,909,751,501 and $2,215,955,836, respectively.
Purchases and sales of U.S. government obligations by the Fund aggregated
$525,622,907 and $384,411,620, respectively.
4. CAPITAL SHARES
At October 31, 1995, 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; 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 Health Care Fund; 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
Currency 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 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;
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 High Income Fund; and
200,000,000 were classified as shares of G.T. Global Consumer Products and
Services Fund. 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.
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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 17,764,859 $ 154,603,577 19,001,277 $ 188,254,231
Shares issued in connection with reinvestment of distributions............ 2,042,839 17,630,697 5,879,273 57,782,308
----------- ------------- ----------- -------------
19,807,698 172,234,274 24,880,550 246,036,539
Shares repurchased........................................................ (34,203,619) (297,666,599) (30,701,436) (286,176,445)
----------- ------------- ----------- -------------
Net decrease.............................................................. (14,395,921) $(125,432,325) (5,820,886) $ (40,139,906)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 20,700,346 $ 178,801,868 28,653,167 $ 277,906,482
Shares issued in connection with reinvestment of distributions............ 1,005,589 8,536,817 2,091,794 20,339,702
----------- ------------- ----------- -------------
21,705,935 187,338,685 30,744,961 298,246,184
Shares repurchased........................................................ (25,343,381) (218,171,165) (16,898,465) (153,454,674)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (3,637,446) $ (30,832,480) 13,846,496 $ 144,791,510
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 15,659 $ 141,450
Shares issued in connection with reinvestment of distributions............ 397 3,476
----------- -------------
16,056 144,926
Shares repurchased........................................................ (1,142) (9,928)
----------- -------------
Net increase.............................................................. 14,914 $ 134,998
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 61
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
5. COVERED CALL OPTIONS WRITTEN:
The Fund's written options contracts activity for the year ended October 31,
1995 was as follows:
<TABLE>
<CAPTION>
UNDERLYING NOMINAL
AMOUNT IN USD PREMIUMS
-------------------- ------------
<S> <C> <C>
Options outstanding at October 31, 1994............................................... 0 $ 0
Options written....................................................................... 69,420,000 319,332
Options cancelled in closing purchase transactions ($819,156 loss realized)........... (69,420,000) (319,332)
Options expired prior to exercise..................................................... 0 0
Options exercised..................................................................... 0 0
-------------------- ------------
Options outstanding at October 31, 1995............................................... 0 $ 0
-------------------- ------------
-------------------- ------------
</TABLE>
6. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Service,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 62
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Strategic
Income Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Strategic Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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, 1995 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 Strategic Income Fund as of October 31, 1995, 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 15, 1995
Statement of Additional Information Page 63
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (88.2%)
Argentina (4.8%)
Republic of Argentina:
Discount Bond, 6.875% due 3/31/23+ ............... USD 22,500,000 $ 12,684,375 2.3
Par Bond, 5% due 3/31/23=/= ....................... USD 15,600,000 7,449,000 1.4
Floating Rate Bond, 6.8125% due 3/31/05+ .......... USD 7,500,000 4,443,750 0.8
BOCON Pre 2, 5.83% due 4/1/01[.] + ................ USD 2,150,000 1,751,713 0.3
Central Bank of Argentina, BONEX, 5.9375% due
12/28/99+ .......................................... USD 78,125 73,250 --
Australia (1.9%)
Australian Government, 7.5% due 7/15/05 ............. AUD 14,900,000 10,401,748 1.9
Brazil (4.8%)
Federal Republic of Brazil:
Par Z-L Bond, 4.25% due 4/15/24=/= ................ USD 31,000,000 15,035,000 2.8
C Bond, 4% due 4/15/14 (Effective rate at year end
is 6.035%, including "payment-in-kind" bonds.)[.]
=/ = ............................................. USD 14,114,066 7,180,531 1.3
Debt Conversion Bond Series L, 6.875% due
4/15/12+ ......................................... USD 6,800,000 3,731,500 0.7
Earned Interest Bond, 6.8125% due 4/15/06+ ........ USD 400,000 265,000 --
Bulgaria (3.1%)
Bulgaria:
Discount Bond Series A, 6.75% due 7/28/24 -
EURO+ ............................................ USD 13,000,000 6,548,750 1.2
Discount Bond Series A, 6.75% due 7/28/24 - 144A+
{.} .............................................. USD 10,164,755 5,120,495 0.9
Past Due Interest Bond (IAB), 6.75% due 7/28/11 -
144A+ {.} ........................................ USD 8,146,553 3,599,758 0.7
Discount Bond Series B, 7.25% 7/28/24+ ............ USD 3,000,000 1,518,750 0.3
Canada (1.8%)
Canadian Government, 8.75% due 12/1/05 .............. CAD 12,200,000 9,856,194 1.8
Costa Rica (1.3%)
Banco Central de Costa Rica:
Principal Bond Series A, 6.25% due 5/21/10 ........ USD 6,300,000 3,685,500 0.7
Interest Bond Series A, 6.76563% due 5/21/05+ ..... USD 3,986,872 3,169,563 0.6
Denmark (2.0%)
Kingdom of Denmark, 7% due 12/15/04 ................. DKK 63,600,000 11,042,799 2.0
Ecuador (3.2%)
Ecuador:
Par Bond, 3% due 2/28/25 - 144A=/= {.} ............ USD 17,999,000 5,984,668 1.1
Discount Bond, 6.8125% due 2/28/25 - EURO+ ........ USD 11,000,000 5,472,500 1.0
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective yield at year end is 4.27%, including
"payment-in-kind" bonds.)[.] + {.} ............... USD 9,989,113 3,321,380 0.6
Par Bond, 3% due 2/28/25 - EURO=/= ................ USD 5,000,000 1,662,500 0.3
Earned Interest Bond, 6.75% due 12/21/04 - 144A+
{.} .............................................. USD 2,067,975 1,251,125 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 64
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
France (5.3%)
French Treasury Bond (BTAN), 7% due 10/12/00 ........ FRF 73,900,000 $ 15,366,544 2.8
France O.A.T., 7.25% due 4/25/06 .................... FRF 66,250,000 13,450,573 2.5
Germany (3.7%)
Deutschland Republic, 6.25% due 1/4/24 .............. DEM 32,000,000 20,104,313 3.7
Ireland (1.0%)
Irish Gilts, 6.25% due 10/18/04 ..................... IEP 3,800,000 5,472,836 1.0
Italy (7.9%)
Italian Buoni Poliennali del Tesoro (BTPS):
8.5% due 4/1/04 ................................... ITL 23,090,000,000 12,119,786 2.2
8.5% due 1/1/04 ................................... ITL 11,650,000,000 6,138,412 1.1
9.5% due 1/1/05 ................................... ITL 10,750,000,000 5,953,062 1.1
8.5% due 8/1/99 ................................... ITL 10,000,000,000 5,776,306 1.1
Republic of Italy:
5.125% due 7/29/03 ................................ JPY 1,194,000,000 13,273,481 2.4
Mexico (4.1%)
United Mexican States:
Par Bond Series B, 6.25% due 12/31/19+/+ ......... USD 20,900,000 12,317,938 2.3
Par Bond Series A, 6.25% due 12/31/19+/+ .......... USD 16,250,000 9,577,344 1.8
New Zealand (2.0%)
New Zealand Government:
6.5% due 2/15/00 ................................. NZD 8,625,000 5,544,377 1.0
8% due 11/15/06 ................................... NZD 7,815,000 5,450,752 1.0
Nigeria (2.3%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20=/= +/+ .................................... USD 26,000,000 12,171,250 2.2
Nigeria Promissory Notes, 5.092% due 1/5/10=/= ...... USD 2,000,000 730,000 0.1
Philippines (2.1%)
Central Bank of the Philippines, Par Bond Series B,
5.75% due 12/1/17=/= ............................... USD 15,600,000 11,446,500 2.1
Poland (4.2%)
Poland:
Past Due Interest Bond, 3.75% due 10/27/14 - 144A=/
= {.} ............................................ USD 21,990,000 13,908,675 2.5
Discount Bond, 6.875% due 10/27/24 - EURO+ ........ USD 9,000,000 6,896,250 1.3
Par Bond, 2.75% due 10/27/24 - 144A=/= {.} ........ USD 4,318,000 1,921,510 0.4
Par Bond, 2.75% due 10/27/24 - EURO=/= ............ USD 81,000 36,045 --
Portgual (1.0%)
Portuguese Government Bond, 11.875% due 2/23/05 ..... PTE 773,000,000 5,393,278 1.0
South Africa (0.6%)
Republic of South Africa, 9.625% due 12/15/99 ....... USD 2,880,000 3,067,200 0.6
Spain (3.8%)
Kingdom of Spain:
5.75% due 3/23/02 ................................. JPY 1,325,000,000 15,403,882 2.8
10% due 2/28/05 ................................... ESP 676,800,000 5,278,496 1.0
Sweden (4.0%)
Swedish Government, 13% due 6/15/01 ................. SEK 124,700,000 22,041,832 4.0
United Kingdom (2.2%)
United Kingdom Treasury, 7% due 11/6/01 ............. GBP 8,000,000 12,284,659 2.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 65
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
United States (17.3%)
United States Treasury Note:
6.875% due 3/31/00 ................................ USD 29,000,000 $ 30,169,077 5.5
7.75% due 11/30/99 ................................ USD 15,000,000 16,035,945 2.9
6.5% due 8/15/05 ................................. USD 5,400,000 5,583,940 1.0
United States Treasury Bond, 6.875% due 8/15/25 ..... USD 40,400,000 43,291,145 7.9
Uruguay (0.2%)
Banco Central del Uruguay, Par Bond Series A, 6.75%
due 2/18/21+/+ ..................................... USD 1,370,000 856,250 0.2
Venezuela (3.6%)
Republic of Venezuela:
Par Bond Series A, 6.75% due 3/31/20+/+ ........... USD 29,000,000 14,989,375 2.7
Debt Conversion Bond, 6.8125% due 12/18/07+ ....... USD 7,500,000 3,703,125 0.7
Discount Bond Series B, 6.9375% due 3/31/20+ +/
+ ................................................ USD 2,500,000 1,325,000 0.2
------------
Total Government & Government Agency Obligations (cost
$471,956,479) ......................................... 482,329,007
------------
Sovereign Debt (6.5%)
Morocco (4.8%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.6875%
due 1/1/09+ ........................................ USD 43,500,000 25,964,063 4.8
Russia (1.7%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- .............................. USD 28,500,000 9,226,163 1.7
------------
Total Sovereign Debt (cost $40,522,635) ................. 35,190,226
------------
Corporate Bonds (0.9%)
Brazil (0.5%)
Banco BCN - BCN Leasing, 11% due 6/9/97 - 144A{.} ... USD 2,500,000 2,462,500 0.5
Hong Kong (0.1%)
Pacific Concord Finance Ltd., Convertible Bond, 4.75%
due 12/10/98 ...................................... USD 1,000,000 795,000 0.1
India (0.1%)
Reliance Industries Ltd., 8.125% due 9/27/05 -
144A{.} ............................................ USD 700,000 705,250 0.1
Indonesia (0.2%)
Asia Pulp & Paper International Finance Co., Ltd.,
11.75% due 10/1/05 ................................. USD 850,000 872,048 0.2
------------
Total Corporate Bonds (cost $4,767,553) ................ 4,834,798
------------
Other Security (0.8%)
Argentina (0.8%)
Argentina Local Markets Trust 1994-1 Pre 2, 13.375%
due 4/15/01 - 144A{.} (cost $5,000,000) ........... USD 5,000,000 4,612,500 0.8
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $522,246,667) ..... 526,966,531 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 66
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (0.5%)
Mexico (0.5%)
Mexican Cetes, effective yield 45.14%, due
9/26/96 ............................................ MXN 25,600,000 $ 2,543,209 0.5
------------ -----
(cost $2,852,738)
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- --------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80% collateralized by $14,470,000 U.S. Treasury
Strips, due 5/15/05 (market value of collateral is
$8,089,969, including accrued interest).
(cost $7,902,273) ................................... 7,902,273 1.4
------------ -----
TOTAL INVESTMENTS (cost $533,001,678) ................... 537,412,013 98.3
Other Assets and Liabilities ............................ 9,047,586 1.7
------------ -----
NET ASSETS .............................................. $546,459,599 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $546,459,599.
+ The coupon rate shown on floating rate note represents the rate at
period end.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} 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.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
=/= The coupon rate shown on step-up coupon bond represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $535,702,133 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 16,996,004
Unrealized depreciation: (15,286,124)
-------------
Net unrealized appreciation: $ 1,709,880
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 67
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ----------------------------------------------------------------------------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Australian Dollars........................................................... 5,899,101 1.32674 01/18/96 $ 80,344
Canadian Dollars............................................................. 849,618 1.33990 12/18/95 (1,192)
Danish Kroner................................................................ 5,766,273 5.69380 11/14/95 233,939
Deutsche Marks............................................................... 12,097,061 1.45700 11/30/95 429,251
Deutsche Marks............................................................... 8,334,580 1.42383 11/30/95 108,468
Deutsche Marks............................................................... 16,409,308 1.41600 11/30/95 123,997
Deutsche Marks............................................................... 782,751 1.42380 11/30/95 10,171
Deutsche Marks............................................................... 11,741,265 1.42704 11/30/95 178,870
Deutsche Marks............................................................... 1,067,388 1.39500 11/30/95 (7,881)
Deutsche Marks............................................................... 5,457,909 1.39797 11/30/95 (28,618)
Deutsche Marks............................................................... 7,628,489 1.39266 01/24/96 (47,469)
Deutsche Marks............................................................... 5,066,630 1.38179 01/24/96 (71,633)
French Francs................................................................ 385,274 4.95845 12/04/95 5,186
Irish Punts.................................................................. 323,785 0.61637 11/29/95 (695)
Italian Lira................................................................. 538,717 1,608.60000 01/26/96 (851)
Japanese Yen................................................................. 655,646 99.70000 12/18/95 (11,355)
Japanese Yen................................................................. 2,741,883 99.64300 12/18/95 (49,081)
Japanese Yen................................................................. 2,735,968 99.16200 12/18/95 (62,483)
Japanese Yen................................................................. 2,721,179 98.89100 12/18/95 (69,773)
Pounds Sterling.............................................................. 4,014,648 0.63788 01/16/96 17,013
Swedish Krona................................................................ 146,879 6.72800 01/05/96 1,330
Swedish Krona................................................................ 2,018,882 6.64000 01/05/96 (8,227)
------------- -------------
Total Contracts to Buy (Payable amount $96,553,923)........................ 97,383,234 829,311
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 17.82%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Danish Kroner................................................................ 5,766,273 5.51880 11/14/95 (58,510)
Danish Kroner................................................................ 11,713,546 5.54454 11/17/95 (173,003)
Deutsche Marks............................................................... 1,231,054 1.47210 11/30/95 (55,862)
Deutsche Marks............................................................... 14,395,503 1.47736 11/30/95 (702,158)
Deutsche Marks............................................................... 17,320,145 1.47716 11/30/95 (842,580)
Deutsche Marks............................................................... 2,264,701 1.40745 11/30/95 (3,460)
French Francs................................................................ 16,275,420 4.90645 12/04/95 (48,891)
French Francs................................................................ 6,602,150 5.08000 12/13/95 (243,882)
French Francs................................................................ 6,249,558 5.07865 12/13/95 (229,257)
French Francs................................................................ 838,044 4.93700 12/13/95 (7,580)
French Francs................................................................ 217,074 4.88700 12/13/95 237
Irish Punts.................................................................. 5,698,615 0.63418 11/29/95 (148,103)
Italian Lira................................................................. 2,860,910 1,634.55000 01/11/96 (46,680)
Italian Lira................................................................. 1,138,145 1,609.60000 01/11/96 (1,216)
Italian Lira................................................................. 5,131,731 1,637.27600 01/26/96 (81,910)
Italian Lira................................................................. 5,474,686 1,628.90000 01/26/96 (59,682)
Japanese Yen................................................................. 4,338,111 100.88000 12/18/95 23,507
Japanese Yen................................................................. 5,718,419 102.15850 12/18/95 (40,967)
Japanese Yen................................................................. 739,451 97.21000 12/18/95 32,075
New Zealand Dollars.......................................................... 5,365,302 1.54086 11/29/95 (82,523)
Portuguese Escudos........................................................... 5,829,365 156.00000 11/20/95 (284,493)
Pounds Sterling.............................................................. 220,412 0.63355 01/16/96 564
Spanish Pesetas.............................................................. 5,446,641 120.17500 11/07/95 78,635
Swedish Krona................................................................ 10,904,362 7.03330 01/05/96 (567,820)
Swedish Krona................................................................ 3,146,703 6.80770 01/05/96 (65,009)
------------- -------------
Total Contracts to Sell (Receivable amount $141,277,753)................... 144,886,321 (3,608,568)
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 26.51%
Total Open Forward Foreign Currency Contracts, Net......................... $(2,779,257)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 68
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $533,001,678)
(Note 1)............................................... $537,412,013
U.S. currency.............................. $ 440 --
Foreign currencies (cost $554,748)......... 555,044 555,484
--------
Receivable for securities sold.......................... 56,097,535
Interest receivable..................................... 13,665,276
Receivable for Fund shares sold......................... 236,106
Cash held as collateral for securities loaned (Note
1)..................................................... 43,729,013
------------
Total assets.......................................... 651,695,427
------------
Liabilities:
Payable for securities purchased........................ 56,250,305
Payable for open forward foreign currency contracts, net
(Note 1)............................................... 2,779,257
Payable for Fund shares repurchased..................... 1,410,456
Payable for service and distribution expenses (Note
2)..................................................... 361,364
Payable for investment management and administration
fees (Note 2).......................................... 338,404
Payable for printing and postage expenses............... 151,751
Payable for transfer agent fees (Note 2)................ 83,499
Payable for professional fees........................... 33,962
Payable for registration and filing fees (Note 2)....... 31,146
Payable for custodian fees (Note 1)..................... 25,818
Distribution payable.................................... 19,666
Payable for fund accounting fees (Note 2)............... 11,792
Payable for Directors' fees and expenses (Note 2)....... 5,451
Other accrued expenses.................................. 3,944
Collateral for securities loaned (Note 1)............... 43,729,013
------------
Total liabilities..................................... 105,235,828
------------
Net assets................................................ $546,459,599
------------
------------
Class A:
Net asset value and redemption price per share
($188,164,713 DIVIDED BY 18,225,463 shares
outstanding)............................................. $ 10.32
------------
------------
Maximum offering price per share (100/95.25 of
$10.32) *................................................ $ 10.83
------------
------------
Class B:+
Net asset value and offering price per share ($357,852,132
DIVIDED BY 34,647,303 shares outstanding)................ $ 10.33
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption
price per share ($442,754 DIVIDED BY 42,881 shares
outstanding)............................................. $ 10.33
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................ $697,904,342
Accumulated net investment loss......................... (68,169)
Accumulated net realized loss on investments and foreign
currency transactions.................................. (152,991,131)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies...................... (2,795,778)
Net unrealized appreciation of investments.............. 4,410,335
------------
Total -- representing net assets applicable to capital
shares outstanding....................................... $546,459,599
------------
------------
<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 69
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of
$181,612).................................................. $ 65,875,609
------------
Total investment income................................... 65,875,609
------------
Expenses:
Service and distribution expenses: (Note 2)
Class A.................................. $ 746,208
Class B.................................. 3,820,587 4,566,795
------------
Investment management and administration fees (Note 2)...... 4,293,053
Transfer agent fees (Note 2)................................ 1,218,500
Custodian fees (Note 1)..................................... 318,141
Printing and postage expenses............................... 289,500
Fund accounting fees (Note 2)............................... 150,989
Registration and filing fees................................ 123,758
Audit fees.................................................. 64,970
Legal fees.................................................. 36,500
Directors' fees and expenses (Note 2)....................... 20,950
Insurance expenses.......................................... 8,785
------------
Total expenses before reductions.......................... 11,091,941
------------
Expense reductions (Note 1)............................. (135,405)
------------
Total net expenses........................................ 10,956,536
------------
Net investment income......................................... 54,919,073
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... (69,013,143)
Net realized loss on foreign currency
transactions.............................. (13,662,464)
------------
Net realized loss during the year......................... (82,675,607)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (3,747,114)
Net change in unrealized appreciation of
investments............................... 35,939,954
------------
Net unrealized appreciation during the year............... 32,192,840
------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (50,482,767)
------------
Net increase in net assets resulting from operations.......... $ 4,436,306
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 70
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 54,919,073 $ 47,861,136
Net realized loss on investments and
foreign currency transactions............. (82,675,607) (79,354,248)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (3,747,114) (9,380)
Net change in unrealized appreciation
(depreciation) of investments............. 35,939,954 (66,692,413)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 4,436,306 (98,194,905)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (16,844,112) (21,322,221)
From net realized gain on investments...... -- (8,450,873)
Return of capital.......................... (852,171) (4,442,690)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (27,777,018) (29,594,068)
From net realized gain on investments...... -- (10,411,111)
Return of capital.......................... (1,405,284) (5,633,875)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (14,952) --
Return of capital.......................... (756) --
----------------- -----------------
Total distributions...................... (46,894,293) (79,854,838)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 194,343,201 654,688,923
Decrease from capital shares repurchased... (339,216,716) (341,148,524)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (144,873,515) 313,540,399
----------------- -----------------
Total increase (decrease) in net assets...... (187,331,502) 135,490,656
Net assets:
Beginning of year.......................... 733,791,101 598,300,445
----------------- -----------------
End of year................................ $ 546,459,599 $ 733,791,101
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 71
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------
1995(E) 1994 1993(E) 1992 1991
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20
----------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income................. 0.97 0.79 0.96 0.86 0.84**
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 0.31 (0.02)
----------- ----------- ----------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.28 (1.35) 3.81 1.17 0.82
----------- ----------- ----------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.80) (0.79) (0.96) (0.83) (0.60)
From net realized gain on
investments.......................... -- (0.38) (0.37) -- (0.51)
Return of capital..................... (0.04) (0.21) -- -- --
From sources other than net investment
income............................... -- -- (0.12) -- --
----------- ----------- ----------- ---------- ----------
Total distributions................. (0.84) (1.38) (1.45) (0.83) (1.11)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period.......... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91
----------- ----------- ----------- ---------- ----------
----------- ----------- ----------- ---------- ----------
Total investment return (c)............. 3.06% (10.44)% 37.0% 11.1% 7.7%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 188,165 $ 275,241 $ 287,870 $ 83,849 $ 55,967
Ratio of net investment income to
average net assets..................... 9.64% 6.74% 7.2% 7.6% 7.2%**
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.42% 1.40% 1.7% 1.8% 1.9%**
Without expense reductions............ 1.45% --%* --%* --%* --%*
Ratio of interest expense to average net
assets................................. N/A 0.10% N/A N/A N/A
Portfolio turnover rate++++............. 238% 583% 310% 418% 630%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) Ratios not meaningful due to short period of operation of Class B
shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.01 for the year ended October 31, 1991.
Without such reimbursement, the expense ratio would have been 1.92%
and the ratio of net investment income to average net asssets would
have been 7.16% for the year ended October 31, 1991.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 72
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
------------------------------------------------------- CLASS+++
-------------
YEAR ENDED OCTOBER 22, 1992 JUNE 1, 1995
OCTOBER 31, TO TO
------------------------------------ OCTOBER 31, OCTOBER 31,
1995(E) 1994 1993(E) 1992 1995(E)
--------- ---------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 13.60 $ 11.24 $11.36 $ 10.32
--------- ---------- ----------- ------- -------------
Income from investment operations:
Net investment income................. 0.91 0.73 0.89 0.01 0.41
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 (0.13) (0.04)
--------- ---------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 0.22 (1.41) 3.74 (0.12) 0.37
--------- ---------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ (0.73) (0.72) (0.89) -- (0.34)
From net realized gain on
investments.......................... -- (0.38) (0.37) -- --
Return of capital..................... (0.04) (0.21) -- -- (0.02)
From sources other than net investment
income............................... -- -- (0.12) -- --
--------- ---------- ----------- ------- -------------
Total distributions................. (0.77) (1.31) (1.38) -- (0.36)
--------- ---------- ----------- ------- -------------
Net asset value, end of period.......... $ 10.33 $ 10.88 $ 13.60 $11.24 $ 10.33
--------- ---------- ----------- ------- -------------
--------- ---------- ----------- ------- -------------
Total investment return (c)............. 2.48% (11.02)% 36.2% (1.1)%(b) 3.72%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $357,852 $458,550 $310,431 $ 533 $ 443
Ratio of net investment income to
average net assets..................... 8.99% 6.09% 6.5% N/A(d) 9.99%(a)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 2.07% 2.05% 2.4% N/A(d) 1.07%(a)
Without expense reductions............ 2.10% --%* --%* --%* 1.10%(a)
Ratio of interest expense to average net
assets................................. N/A 0.10% N/A N/A N/A
Portfolio turnover rate++++............. 238% 583% 310% 418% 238%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) Ratios not meaningful due to short period of operation of Class B
shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.01 for the year ended October 31, 1991.
Without such reimbursement, the expense ratio would have been 1.92%
and the ratio of net investment income to average net asssets would
have been 7.16% for the year ended October 31, 1991.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 73
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Strategic Income 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 twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 74
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities." 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
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option. The
current market value of an option listed on a traded exchange is valued at its
last bid price, or, in the case of an over-the-counter option, is valued at the
average last bid prices obtained from brokers. 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 portfolio 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 Fund may use options to manage its exposure
to the bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 75
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the bond market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $39,303,687
were on loan to brokers. The loans were secured by cash collateral of
$43,729,013 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the period ended October 31, 1995, the Fund received fees of $135,405 which were
used to reduce the Fund's custodian fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$151,873,284, of which $77,456,193 expires in 2002 and $74,417,091 expires in
2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currences, 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.
(M) 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.
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 0.725% on the first $500 million of average daily net assets of the
Fund; 0.70% on the next $1 billion; 0.675% on the next $1 billion and
Statement of Additional Information Page 76
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
0.65% on amounts thereafter. These fees are computed daily and paid monthly, and
are subject to reduction in any year to the extent that the Fund's 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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$68,458 of such sales charges. Purchases of Class A Shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $88,302 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $2,355,668. 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $34,980 to G.T. Capital.
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
Statement of Additional Information Page 77
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
$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, 1995, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $1,084,339,117 and $1,234,939,423, respectively.
Purchases and sales of U.S. government obligations by the Fund aggregated
$247,139,247 and $184,605,981, respectively.
4. CAPITAL SHARES
At October 31, 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
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; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS A: SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 10,413,395 $ 105,118,727 19,809,908 $ 246,272,141
Shares issued in connection with reinvestment of distributions............ 1,180,205 11,913,775 1,971,428 23,827,880
----------- ------------- ----------- -------------
11,593,600 117,032,502 21,781,336 270,100,021
Shares repurchased........................................................ (18,672,585) (187,700,412) (17,632,683) (210,355,215)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (7,078,985) $ (70,667,910) 4,148,653 $ 59,744,806
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS B: SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 5,950,544 $ 60,333,373 28,502,079 $ 357,951,389
Shares issued in connection with reinvestment of distributions............ 1,633,228 16,496,489 2,229,217 26,637,513
----------- ------------- ----------- -------------
7,583,772 76,829,862 30,731,296 384,588,902
Shares repurchased........................................................ (15,079,063) (151,484,130) (11,406,753) (130,793,309)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (7,495,291) $ (74,654,268) 19,324,543 $ 253,795,593
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS: SHARES AMOUNT
- -------------------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 44,461 $ 465,129
Shares issued in connection with reinvestment of distributions............ 1,535 15,708
----------- -------------
45,996 480,837
Shares repurchased........................................................ (3,115) (32,174)
----------- -------------
Net increase.............................................................. 42,881 $ 448,663
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 78
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
5. WRITTEN OPTIONS:
The Fund's written option contracts activity for the year ended October 31,
1995, was as follows:
COVERED CALL AND PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
------------- ----------
<S> <C> <C>
Options outstanding at October 31, 1994................. 0 $ 0
Options written......................................... 27,250,000 284,000
Options cancelled in closing purchase transactions
($52,000 gain realized)................................ (16,000,000) (192,000)
Options expired prior to exercise....................... (11,250,000) (92,000)
Options exercised....................................... 0 0
------------- ----------
Options outstanding at October 31, 1995................. 0 $ 0
------------- ----------
------------- ----------
</TABLE>
6. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 79
<PAGE>
GT GLOBAL HIGH INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global High Income Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global High Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the three years in the period then ended and for the period from October
22, 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, 1995 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 High Income Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from October 22,
1992 (commencement of operations) to October 31, 1992, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 80
<PAGE>
GT GLOBAL HIGH INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global High Income Portfolio (cost
$349,571,820) (Note 1)........................... $358,680,666
Receivable for Fund shares sold................... 2,159,244
Unamortized organizational costs (Note 1)......... 60,379
------------
Total assets.................................... 360,900,289
------------
Liabilities:
Payable for Fund shares repurchased............... 1,988,431
Payable for service and distribution expenses
(Note 2)......................................... 216,771
Payable for printing and postage expenses......... 98,101
Payable for administration fees (Note 2).......... 76,834
Payable for transfer agent fees (Note 2).......... 55,188
Payable for professional fees..................... 26,550
Payable for registration and filing fees.......... 22,725
Payable for fund accounting fees (Note 2)......... 7,738
Payable for insurance expenses.................... 3,452
Payable for Directors' fees and expenses (Note
2)............................................... 2,297
Other accrued expenses............................ 39,875
------------
Total liabilities............................... 2,537,962
------------
Net assets.......................................... $358,362,327
------------
------------
Class A:
Net asset value and redemption price per share
($142,001,916 DIVIDED BY 12,132,732 shares
outstanding)....................................... $ 11.70
------------
------------
Maximum offering price per share (100/95.25 of
$11.70) *.......................................... $ 12.28
------------
------------
Class B:+
Net asset value and offering price per share
($214,897,134 DIVIDED BY 18,379,051 shares
outstanding)....................................... $ 11.69
------------
------------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($1,463,277 DIVIDED BY
124,997 shares outstanding)........................ $ 11.71
------------
------------
Net assets consist of:
Paid in capital (Note 3).......................... $408,061,273
Accumulated net realized loss on investments and
foreign currency transactions.................... (58,807,792)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global High Income Portfolio..................... 6,235
Net unrealized appreciation of investments --
Global High Income Portfolio..................... 9,102,611
------------
Total -- representing net assets applicable to
capital shares outstanding......................... $358,362,327
------------
------------
<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 81
<PAGE>
GT GLOBAL HIGH INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global High Income Portfolio............. $ 46,834,087
------------
Total investment income................................... 46,834,087
------------
Expenses:
Expenses -- Global High Income Portfolio.................... 2,696,978
Service and distribution expenses: (Note 2)
Class A.................................. $ 486,107
Class B.................................. 2,048,951 2,535,058
------------
Administration fees (Note 2)................................ 860,884
Transfer agent fees (Note 2)................................ 657,200
Printing and postage expenses............................... 202,425
Registration and filing fees................................ 131,000
Audit fees.................................................. 92,260
Fund accounting fees (Note 2)............................... 79,660
Legal fees.................................................. 32,958
Amortization of organization costs (Note 1)................. 29,802
Directors' fees and expenses (Note 2)....................... 15,950
Insurance expenses.......................................... 7,477
Other expenses.............................................. 1,000
------------
Total expenses.............................................. 7,342,652
------------
Net investment income......................................... 39,491,435
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
High Income Portfolio..................... (61,405,151)
Net realized loss on foreign currency
transactions -- Global High Income
Portfolio................................. (707,803)
------------
Net realized loss during the year......................... (62,112,954)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global High Income
Portfolio................................. (302)
Net change in unrealized appreciation of
investments -- Global High Income
Portfolio................................. 24,969,833
------------
Net unrealized appreciation during the year............... 24,969,531
------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (37,143,423)
------------
Net increase in net assets resulting from operations.......... $ 2,348,012
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GT GLOBAL HIGH INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 39,491,435 $ 23,589,347
Net realized loss on investments and
foreign currency transactions -- Global
High Income Portfolio..................... (62,112,954) (170,977)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies --
Global High Income Portfolio.............. (302) (517,677)
Net change in unrealized appreciation
(depreciation) of investments -- Global
High Income Portfolio..................... 24,969,833 (39,147,066)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 2,348,012 (16,246,373)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (12,528,224) (11,509,080)
From net realized gain on investments...... (474,126) (3,211,912)
In excess of net realized gain on
investments............................... -- (2,599,203)
Return of capital.......................... (737,846) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (17,274,071) (12,080,267)
From net realized gain on investments...... (622,059) (3,255,413)
In excess of net realized gain on
investments............................... -- (2,634,405)
Return of capital.......................... (1,015,555) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (54,186) --
Return of capital.......................... (3,075) --
----------------- -----------------
Total distributions...................... (32,709,142) (35,290,280)
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 418,666,106 644,572,576
Decrease from capital shares repurchased... (430,339,278) (462,844,981)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (11,673,172) 181,727,595
----------------- -----------------
Total increase (decrease) in net assets...... (42,034,302) 130,190,942
Net assets:
Beginning of year.......................... 400,396,629 270,205,687
----------------- -----------------
End of year................................ $ 358,362,327 $ 400,396,629
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GT GLOBAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------
OCTOBER 22,
1992
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED OCTOBER 31, TO
------------------------------------- OCTOBER 31,
1995 1994(e) 1993(e) 1992
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.56 $ 14.92 $ 11.43 $ 11.43
----------- ----------- ----------- -------
Income from investment operations:
Net investment income................. 1.35 0.94 0.78 --
Net realized and unrealized gain
(loss) on investments................ (1.09) (1.87) 3.92 --
----------- ----------- ----------- -------
Net increase (decrease) from
investment operations.............. 0.26 (0.93) 4.70 --
----------- ----------- ----------- -------
Distributions to shareholders:
From net investment income............ (1.03) (0.94) (0.78) --
From net realized gain on
investments.......................... (0.03) (0.27) -- --
In excess of net realized gain on
investments.......................... -- (0.22) -- --
From sources other than net investment
income............................... -- -- (0.43) --
Return of capital..................... (0.06) -- -- --
----------- ----------- ----------- -------
Total distributions................. (1.12) (1.43) (1.21) --
----------- ----------- ----------- -------
Net asset value, end of period.......... $ 11.70 $ 12.56 $ 14.92 $ 11.43
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Total investment return (d)............. 2.81% (6.45)% 43.6% -- %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 142,002 $ 167,974 $ 143,171 $ 207
Ratio of net investment income to
average net assets..................... 11.85% 7.0% 6.4% N/A(c)
Ratio of expenses to average net
assets................................. 1.75% 1.57% 2.2% N/A(c)
Ratio of interest expense to average net
assets................................. N/A 0.22% N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor class shares.
(a) Not annualized.
(b) Annualized.
(c) Ratios not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share data were calculated based upon weighted
average shares during the year.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<PAGE>
GT GLOBAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------
OCTOBER 22, ADVISOR
1992 CLASS+++
(COMMENCEMENT -------------
OF OPERATIONS) JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO TO
------------------------------------- OCTOBER 31, OCTOBER 31,
1995 1994(e) 1993(e) 1992 1995
----------- ----------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.56 $ 14.90 $ 11.43 $ 11.43 $ 11.44
----------- ----------- ----------- ------- -------------
Income from investment operations:
Net investment income................. 1.27 0.86 0.70 -- 0.57
Net realized and unrealized gain
(loss) on investments................ (1.09) (1.85) 3.90 -- 0.17
----------- ----------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 0.18 (0.99) 4.60 -- 0.74
----------- ----------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ (0.96) (0.86) (0.70) -- (0.44)
From net realized gain on
investments.......................... (0.03) (0.27) -- -- --
In excess of net realized gain on
investments.......................... -- (0.22) -- -- --
From sources other than net investment
income............................... -- -- (0.43) -- --
Return of capital..................... (0.06) -- -- -- (0.03)
----------- ----------- ----------- ------- -------------
Total distributions................. (1.05) (1.35) (1.13) -- (0.47)
----------- ----------- ----------- ------- -------------
Net asset value, end of period.......... $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 11.71
----------- ----------- ----------- ------- -------------
----------- ----------- ----------- ------- -------------
Total investment return (d)............. 2.07% (6.99)% 42.6% -- %(a) 6.54%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 214,897 $ 232,423 $ 127,035 $ 53 $ 1,463
Ratio of net investment income to
average net assets..................... 11.20% 6.35% 5.8% N/A(c) 12.20%(b)
Ratio of expenses to average net
assets................................. 2.40% 2.22% 2.8% N/A(c) 1.40%(b)
Ratio of interest expense to average net
assets................................. N/A 0.22% N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor class shares.
(a) Not annualized.
(b) Annualized.
(c) Ratios not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share data were calculated based upon weighted
average shares during the year.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 85
<PAGE>
GT GLOBAL HIGH INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global High Income 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
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 High Income 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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
$54,325,425 which expires in 2003.
(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 initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $149,100. 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
Statement of Additional Information Page 86
<PAGE>
GT GLOBAL HIGH INCOME FUND
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$67,403 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $61,729 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $1,276,245. In addition, G.T. Global makes on-going 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 2.20%, 2.85%, and 1.85% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $22,563 to G.T. Capital.
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. CAPITAL SHARES
At October 31, 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;
Statement of Additional Information Page 87
<PAGE>
GT GLOBAL HIGH 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 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 Consumer Products and
Services Fund. 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.
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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
--------------------------- ---------------------------
CLASS A: SHARES AMOUNT SHARES AMOUNT
- ------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................... 25,003,318 $ 280,486,242 25,772,262 $ 337,096,408
Shares issued in connection
with reinvestment of
distributions............... 682,971 7,764,542 908,473 12,121,929
----------- ------------- ----------- -------------
25,686,289 288,250,784 26,680,735 349,218,337
Shares repurchased............ (26,927,729) (301,862,112) (22,900,774) (305,091,442)
----------- ------------- ----------- -------------
Net increase (decrease)....... (1,241,440) $ (13,611,328) 3,779,961 $ 44,126,895
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
--------------------------- ---------------------------
CLASS B: SHARES AMOUNT SHARES AMOUNT
- ------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................... 10,582,935 $ 119,426,735 21,671,430 $ 286,814,947
Shares issued in connection
with reinvestment of
distributions............... 826,797 9,372,626 646,902 8,539,292
----------- ------------- ----------- -------------
11,409,732 128,799,361 22,318,332 295,354,239
Shares repurchased............ (11,542,431) (128,317,008) (12,332,246) (157,753,539)
----------- ------------- ----------- -------------
Net increase (decrease)....... (132,699) $ 482,353 9,986,086 $ 137,600,700
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
---------------------------
ADVISOR CLASS: SHARES AMOUNT
- ------------------------------ ----------- -------------
<S> <C> <C>
Shares sold................... 133,919 $ 1,558,699
Shares issued in connection
with reinvestment of
distributions............... 4,923 57,262
----------- -------------
138,842 1,615,961
Shares repurchased............ (13,845) (160,158)
----------- -------------
Net increase.................. 124,997 $ 1,455,803
----------- -------------
----------- -------------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.," and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$334,343 as capital gain dividends for the fiscal year ended October 31, 1995.
Statement of Additional Information Page 88
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global High Income Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
High Income Portfolio, including the portfolio of investments as of October 31,
1995, 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 supplementary data for each of the three years in the period then
ended and for the period from October 22, 1992 (commencement of operations) to
October 31, 1992. 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
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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
High Income Portfolio as of October 31, 1995, 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 supplementary data for each of the three years in
the period then ended and for the period from October 22, 1992 (commencement of
operations) to October 31, 1992, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 89
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (70.7%)
Argentina (10.7%)
Republic of Argentina:
Par Bond, 5% due 3/31/23++ ......................... USD 35,000,000 $ 16,712,500 4.7
Discount Bond, 6.875% due 3/31/23+ ................. USD 17,100,000 9,640,125 2.7
BOCON Pre 2, 5.83% due 4/1/01[.] + ................. USD 5,676,301 4,631,910 1.3
8.375% due 12/20/03 ................................ USD 6,240,000 4,539,600 1.3
Floating Rate Bond, 6.8125% due 3/31/05+ ........... USD 4,500,000 2,666,250 0.7
Brazil (13.2%)
Federal Republic of Brazil:
Par Z-L Bond, 4.25% due 4/15/24++ .................. USD 32,400,000 15,714,000 4.4
C Bond, 4% due 4/15/14 (Effective rate at year end
is 6.035%, including "payment-in-kind" shares.)[.]
++ ................................................ USD 26,530,200 13,497,239 3.8
New Money Bond Series L, 6.875% due 4/15/09+ ....... USD 10,500,000 6,168,750 1.7
Debt Conversion Bond Series L, 6.875% due
4/15/12+ .......................................... USD 11,000,000 6,036,250 1.7
IDU Notes, 6.6875% due 1/1/01+ ..................... USD 6,536,000 5,580,110 1.6
Bulgaria (4.8%)
Bulgaria:
Discount Bond Series A, 6.75% due 7/28/24 -
Euro+ ............................................ USD 13,032,000 6,564,870 1.8
Front Loaded Interest Reduction Bond Series A, 2%
due 7/28/12++ ..................................... USD 21,000,000 5,880,000 1.6
Discount Bond Series A, 6.75% due 7/28/24 - 144A+
{.} ............................................... USD 7,468,426 3,762,220 1.0
Discount Bond Series B, 7.25% due 7/28/24 - Euro+ .... USD 3,000,000 1,518,750 0.4
Costa Rica (2.4%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.76563% due 5/21/05+ ...... USD 8,876,432 7,056,763 2.0
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 2,700,000 1,579,500 0.4
Ecuador (4.1%)
Ecuador:
Par Bond, 3% due 2/28/25 - 144A++ {.} .............. USD 17,000,000 5,652,500 1.6
Par Bond, 3% due 2/28/25 - Euro++ .................. USD 10,750,000 3,574,375 1.0
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective rate at year end is 4.27%, including
"payment-in-kind" shares.)[.] + {.} .............. USD 8,883,865 2,953,885 0.8
Discount Bond, 6.8125% due 2/28/25 - Euro+ ......... USD 3,500,000 1,741,250 0.5
Earned Interest Bond, 6.75% due 12/21/04 - 144A+
{.} ............................................... USD 1,330,875 805,179 0.2
Mexico (8.3%)
United Mexican States:
Par Bond Series B, 6.25% due 12/31/19+/+ ........... USD 30,250,000 17,828,594 5.0
Par Bond Series A, 6.25% due 12/31/19+/+ ........... USD 15,500,000 9,135,313 2.5
Discount Bond Series A, 6.76563% due 12/31/19+ +/
+ ................................................. USD 4,500,000 3,015,000 0.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 90
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Nigeria (3.9%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ +/+ ...................................... USD 28,750,000 $ 13,458,594 3.7
Nigeria Promissory Notes, 5.092% due 1/5/10++ ........ USD 2,500,000 912,500 0.2
Panama (0.5%)
Panama, Interest Reduction Bond, When-issued - 3.5%,
due 6/30/14 - 144A++ {.} -/- ........................ USD 4,700,000 1,809,500 0.5
Philippines (3.9%)
Central Bank of the Philippines:
Par Bond Series B, 5.75% due 12/1/17++ ............. USD 16,000,000 11,740,000 3.3
Front Loaded Interest Reduction Bond Series B, 5%
due 6/1/08++ ...................................... USD 3,000,000 2,295,000 0.6
Poland (10.1%)
Poland:
Past Due Interest Bond, 3.75% due 10/27/14 - 144A++
{.} ............................................... USD 25,162,000 15,914,965 4.4
Discount Bond, 6.875% due 10/27/24 - Euro+ ......... USD 19,967,000 15,299,714 4.3
Past Due Interest Bond, 3.75% due 10/27/14 -
Euro++ ............................................ USD 8,000,000 5,160,000 1.4
South Africa (3.2%)
Republic of South Africa:
11.5% due 5/30/00 ................................. ZAR 30,050,000 7,442,247 2.1
9.625% due 12/15/99 ................................ USD 3,600,000 3,834,000 1.1
Uruguay (1.5%)
Banco Central del Uruguay:
New Money Bond, 6.875% due 2/18/06+ ................ USD 3,750,000 2,718,750 0.8
Par Bond Series A, 6.75% due 2/18/21+/+ ............ USD 2,290,000 1,431,250 0.4
Par Bond Series B, 6.75% due 2/18/21+/+ ............ USD 1,500,000 937,500 0.3
Venezuela (4.1%)
Republic of Venezuela:
Discount Bond Series A, 6.6875% due 3/31/20+ +/+ ... USD 9,925,000 5,260,250 1.5
Discount Bond Series B, 6.9375% due 3/31/20+ +/+ ... USD 7,000,000 3,710,000 1.0
Par Bond Series A, 6.75% due 3/31/20+/+ ............ USD 5,750,000 2,972,031 0.8
Front Loaded Interest Reduction Bond Series A,
6.8125% due 3/31/07+ .............................. USD 2,750,000 1,381,875 0.4
Par Bond Series B, 6.75% due 3/31/20+/+ ............ USD 2,500,000 1,292,188 0.4
------------
Total Government & Government Agency Obligations (cost
$242,911,251) ........................................... 253,825,297
------------
Sovereign Debt (11.5%)
Morocco (4.7%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.6875%
due 1/1/09+ ........................................ USD 28,000,000 16,712,500 4.7
Peru (2.0%)
Peru Loan Agreement ** -/- ........................... USD 9,200,000 6,348,000 1.8
Peru Loan Agreement (Citibank Issued) ** -/- ........ USD 1,000,000 690,000 0.2
Russia (4.8%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- ............................... USD 53,000,000 17,157,425 4.8
------------
Total Sovereign Debt (cost $39,833,286) .................. 40,907,925
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 91
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (6.4%)
Brazil (0.8%)
Banco BCN - BCN Leasing, 11% due 6/9/97 - 144A{.} .... USD 3,000,000 $ 2,955,000 0.8
Colombia (0.4%)
Oleoducto Central S.A. (OCENSA), 9.35% due 9/1/05 -
144A{.} ............................................. USD 1,500,000 1,511,250 0.4
Hong Kong (0.4%)
Pacific Concord Finance Ltd., Convertible Bond, 4.75%
due 12/10/98 ........................................ USD 2,000,000 1,590,000 0.4
India (0.2%)
Reliance Industries Ltd., 8.125% due 9/27/05 -
144A{.} ............................................. USD 700,000 705,250 0.2
Indonesia (2.6%)
PT Polysindo Eka Perkasa, effective yield 23.23%, due
7/27/97 ............................................. IDR 12,000,000,000 3,766,520 1.0
Dharmala Sakti Sejahtera Promissory Note, effective
yield 23.10%, due 6/9/97 ............................ IDR 9,000,000,000 2,892,291 0.8
PT Tjiwi Kimia, 13.25% due 8/1/01 .................... USD 1,000,000 1,097,500 0.3
Asia Pulp & Paper International Finance Co., Ltd.,
11.75% due 10/1/05 ................................. USD 1,000,000 1,025,939 0.3
PT Indah Kiat, 8.875% due 11/1/00 ................... USD 800,000 768,000 0.2
Malaysia (0.5%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 ............................................. USD 2,000,000 1,630,000 0.5
Philippines (0.9%)
Philippine Long Distance Telephone, 9.875% due
8/1/05 .............................................. USD 2,000,000 2,085,000 0.6
Philippine National Power, 9% due 7/5/02 ............. USD 1,000,000 1,030,000 0.3
South Africa (0.6%)
Sappi BVI Finance Ltd., Convertible Bond, 7.5% due
8/1/02 - 144A{.} .................................... USD 2,000,000 2,030,000 0.6
------------
Total Corporate Bonds (cost $23,474,518) ................ 23,086,750
------------
Structured Notes (1.2%)
Argentina (1.2%)
Republic of Argentina, BOCON Pre 2 Linked Note,
13.875%due 4/2/01 (Issued by Bankers Trust New York
Corporation. The underlying asset is Republic of
Argentina BOCON Pre 2.) (cost $5,000,000) .......... USD 5,000,000 4,259,500 1.2
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $311,219,055) ....... 322,079,472 89.8
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (3.7%)
Mexico (3.7%)
Mexican Cetes: ....................................... MXN -- -- 3.7
Effective yield 47.33%, due 3/20/96 ............... -- 54,000,000 6,405,219 --
Effective yield 47.57%, due 3/28/96 ............... -- 31,000,000 3,641,716 --
Effective yield 45.14%, due 9/26/96 ............... -- 33,500,000 3,328,027 --
------------
Total Treasury Bills (cost $15,091,791) ................. 13,374,962
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 92
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (0.5%)
Indonesia (0.5%)
PT Indah Kiat Pulp & Paper Corp., effective
yield16.88%, due 3/21/96 (cost $1,693,821) ........ IDR 4,000,000,000 $ 1,652,844 0.5
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $16,785,612) .......... 15,027,806 4.2
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80% collateralized by $3,640,000 U.S. Treasury
Strips, due 2/15/02 (market value of collateral is
$2,519,129, including accrued interest). (cost
$2,438,393) .......................................... 2,438,393 0.7
------------ -----
TOTAL INVESTMENTS (cost $330,443,060) .................... 339,545,671 94.7
Other Assets and Liabilities ............................. 19,135,095 5.3
------------ -----
NET ASSETS ............................................... $358,680,766 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $358,680,766.
+ The coupon rate shown on floating rate note represents the rate at
period end.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} 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.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) shares.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $334,925,427 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 17,054,207
Unrealized depreciation: (12,433,963)
-------------
Net unrealized appreciation: $ 4,620,244
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 93
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$330,443,060) (Note 1)........................... $339,545,671
U.S. currency..................................... 658
Receivable for securities sold.................... 14,709,780
Interest receivable............................... 9,226,637
Unamortized organizational costs (Note 1)......... 9,886
------------
Total assets.................................... 363,492,632
------------
Liabilities:
Payable for securities purchased.................. 4,448,672
Payable for investment management and
administration fees (Note 2)..................... 209,120
Payable for custodian fees (Note 1)............... 25,012
Payable for printing and postage expenses......... 22,733
Payable for professional fees..................... 19,894
Payable for Trustees' fees and expenses (Note
2)............................................... 2,815
Other accrued expenses............................ 83,620
------------
Total liabilities............................... 4,811,866
------------
Net assets.......................................... $358,680,766
------------
------------
Net assets consist of:
Paid in capital................................... $323,645,829
Undistributed net investment income............... 78,582,766
Accumulated net realized loss on investments and
foreign currency transactions.................... (52,656,675)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 6,235
Net unrealized appreciation of investments........ 9,102,611
------------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $358,680,766
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 94
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of
$37,276)................................................... $ 46,834,087
------------
Total investment income................................... 46,834,087
------------
Expenses:
Investment management and administration fees (Note 2)...... 2,411,786
Custodian fees (Note 1)..................................... 230,918
Legal fees.................................................. 16,972
Audit fees.................................................. 15,550
Trustees' fees and expenses (Note 2)........................ 6,935
Amortization of organization costs (Note 1)................. 4,997
Printing and postage expenses............................... 2,520
Other expenses.............................................. 7,300
------------
Total expenses.............................................. 2,696,978
------------
Net investment income......................................... 44,137,109
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $(61,405,151)
Net realized loss on foreign currency
transactions.............................. (707,803)
------------
Net realized loss during the year......................... (62,112,954)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ (302)
Net change in unrealized appreciation of
investments............................... 24,969,840
------------
Net unrealized appreciation during the year............... 24,969,538
------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (37,143,416)
------------
Net increase in net assets resulting from operations.......... $ 6,993,693
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 95
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 44,137,109 $ 27,856,747
Net realized loss on investments and
foreign currency transactions............. (62,112,954) (170,977)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... (302) (517,677)
Net change in unrealized appreciation
(depreciation) of investments............. 24,969,840 (39,147,073)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 6,993,693 (11,978,980)
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 322,934,028 632,988,502
Withdrawals................................ (372,158,223) (476,837,876)
----------------- -----------------
Net increase (decrease) from beneficial
interest transactions................... (49,224,195) 156,150,626
----------------- -----------------
Total increase (decrease) in net assets...... (42,230,502) 144,171,646
Net assets:
Beginning of year.......................... 400,911,268 256,739,622
----------------- -----------------
End of year................................ $ 358,680,766 $ 400,911,268
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 96
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
OCTOBER 22, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1995 1994 1993 OCTOBER 31, 1992
----------- ----------- ----------- --------------------
<S> <C> <C> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 358,681 $ 400,911 $ 256,740 $ 200
Ratio of net investment income to
average net assets..................... 12.8% 7.93% 8.0% N/A(a)
Ratio of expenses to average net
assets................................. 0.78% 0.72% 0.9% N/A(a)
Ratio of interest expense to average net
assets................................. N/A 0.22% N/A N/A
Portfolio turnover rate................. 213% 178% 195% none
</TABLE>
- ----------------
(a) Ratios are not meaningful due to short period of operation.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 97
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global High Income 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
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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 TRANSLATIONS
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, sales of 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 year end, resulting from changes in exchange rates.
(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.
Statement of Additional Information Page 98
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
(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 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
amounts 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 hold 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 bond 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 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 bond market and to fluctuations in currency values or interest
rates.
Statement of Additional Information Page 99
<PAGE>
GLOBAL HIGH INCOME 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 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 an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan, and is maintained at this level during the period of the
loan. For the year ended October 31, 1995, the Portfolio received fees of $929
which were used to reduce the Fund's custodian fees. At October 31, 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) 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.
(M) 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 0.475% on the first $500 million of average daily net
assets of the Portfolio; 0.45% on the next $1 billion; 0.425% on the next $1
billion; and 0.40% on amounts thereafter, plus 2% of the Portfolio's total
investment income calculated in accordance with generally accepted accounting
principles, adjusted daily for currency revaluations, on a mark to market basis,
of the Portfolio's assets; provided, however, that during any fiscal year this
amount shall not exceed 2% of the Portfolio's total investment income calculated
in accordance with generally accepted accounting principles. 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 or G.T. Services $500 per year plus $150
for each meeting of the board or any committee thereof attended by the Trustees.
At October 31, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global High Income Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $528,728,519 and $504,864,711, respectively.
Purchases and sales of U.S. government obligations by the Portfolio aggregated
$128,514,376 and $145,460,470, respectively.
Statement of Additional Information Page 100
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
4. WRITTEN OPTIONS:
The Portfolio's written options contract activity for the year ended October 31,
1995 was as follows:
COVERED CALL AND PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
------------- -----------
<S> <C> <C>
Options outstanding at October 31, 1994.................................... 0 $ 0
Options written............................................................ 12,500,000 111,000
Options cancelled in closing purchase transactions......................... 0 0
Options expired prior to exercise.......................................... (12,500,000) (111,000)
Options exercised.......................................................... 0 0
------------- -----------
Options outstanding at October 31, 1995.................................... 0 $ 0
------------- -----------
------------- -----------
</TABLE>
Statement of Additional Information Page 101
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 102
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 103
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 104
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL STRATEGIC INCOME FUND, GT GLOBAL
HIGH INCOME FUND, GLOBAL HIGH INCOME PORTFOLIO, LGT ASSET MANAGEMENT, INC.
OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
INCSA602MC
<PAGE>
GT GLOBAL GROWTH &
INCOME FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
GT Global Growth & Income Fund ("Fund") is a non-diversified mutual fund
organized as a separate series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end management investment company. This Statement of Additional
Information relating to the Class A and Class B shares of the Fund, which is not
a prospectus, supplements and should be read in conjunction with the Fund's
current Class A and Class B Prospectus dated February 29, 1996, a copy of which
is available without charge by writing to the above address or by calling the
Fund at the toll-free telephone number listed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 16
Execution of Portfolio Transactions...................................................................................... 17
Directors and Executive Officers......................................................................................... 20
Management............................................................................................................... 22
Valuation of Fund Shares................................................................................................. 24
Information Relating to Sales and Redemptions............................................................................ 25
Taxes.................................................................................................................... 27
Additional Information................................................................................................... 30
Investment Results....................................................................................................... 31
Description of Debt Ratings.............................................................................................. 37
Financial Statements..................................................................................................... 40
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation together
with current income. The Fund seeks its objective by investing in a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets.
SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by LGT Asset Management to be located in that country may have
substantial off-shore 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 the Fund's ability to invest. For example, 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. LGT Asset Management is not aware at this
time of the existence of any investment or exchange control regulations which
might substantially impair the operations of the Fund as described in the
Prospectus and this Statement of Additional Information. Although restrictions
may in the future make it undesirable to invest in certain countries, LGT Asset
Management does not believe that any current repatriation restrictions would
affect its decisions to invest in the countries eligible for investment by the
Fund. The Fund has no present intention of making any significant investment in
any country or stock market LGT Asset Management considers the political or
economic situation to be at risk of substantial or total loss because of such
political or economic situation.
The Fund may invest in the securities of investment companies within the limits
of the Investment Company Act of 1940, as amended ("1940 Act"). These
limitations currently provide that, in general, the Fund may purchase shares of
a closed-end investment company unless (a) such a purchase would cause the Fund
to own in the aggregate more than 3 percent of the total outstanding voting
stock of the investment company or (b) such a purchase would cause the Fund to
have more than 5 percent of its total assets invested in the investment company
or more than 10 percent of its total assets invested in an aggregate of all such
investment companies. Investment in such investment companies may also involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such investment companies
unless, in the judgment of LGT Asset Management, 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
The Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible issuers. These securities may not necessarily be denominated in the
same currency as the securities for which they may be exchanged. ADRs and ADSs
typically are issued by an American bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depository Receipts ("CDRs"), are issued in
Europe typically by foreign banks and trust companies and evidence ownership of
either foreign or domestic securities. Generally, ADRs and ADSs in registered
form are designed for use in United States securities markets and EDRs in bearer
form are designed for use in European securities markets. For purposes of the
Fund's investment policies, the Fund'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.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
5% of the value of its net assets and not more than 2% of such assets will be
invested in warrants and rights which are not listed on the American or New York
Stock Exchange. Warrants or rights acquired by the Fund in units or attached to
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by the
Company's Board of Directors without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. 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 be made only to
firms deemed by LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, the Fund intends to enter into repurchase
agreements only with banks and dealers believed by LGT Asset Management to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. LGT Asset Management will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300%
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GT GLOBAL GROWTH & INCOME FUND
asset coverage, even though from an investment standpoint such sales might be
disadvantageous. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. Any borrowing by
the Fund may cause greater fluctuation in the value of its shares than would be
the case if the Fund did not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by a vote of
a majority of the Company's Board of Directors. In the event that the Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association certificates or other securities together with a commitment
(for which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain, in a segregated account
with a custodian, cash, U.S. government securities or other liquid, high grade
debt securities in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility. The Fund may
only make short sales "against the box." In this type of short sale, at the time
of the sale the Fund owns the security it has sold short or has the immediate
and unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Fund will
deposit in a separate account with its custodian an equal amount of the
securities sold short or securities convertible into or exchangeable for such
securities at no cost. The Fund could close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund might want to
continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
The Fund might make a short sale "against the box" in order to hedge against
market risks when LGT Asset Management believes that the price of a security may
decline, causing a decline in the value of a security owned by the Fund or a
security convertible into or exchangeable for such security, or when LGT Asset
Management wants to sell the security the Fund owns at a current attractive
price, but also wishes to defer recognition of gain or loss for federal income
tax purposes and for purposes of satisfying certain tests applicable to
regulated investment companies under the Internal Revenue Code of 1986, as
amended ("Code"). In such case, any future losses in the Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses in the long position are reduced will depend upon the
amount of the securities sold short relative to the amount of the securities the
Fund owns, either directly or indirectly, and, in the case where the Fund owns
convertible securities, changes in the investment values or conversion permiums
of such securities. There will be certain additional transaction costs
associated with short sales "against the box," but the Fund will endeavor to
offset these costs with income from the investment of the cash proceeds of short
sales.
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GT GLOBAL GROWTH & INCOME FUND
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 LGT Asset
Management'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 LGT Asset Management is
experienced in the use of these instruments, there can be no assurance that
any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because LGT Asset Management projected a decline in the price of
a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might by wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of LGT Asset Management are not expected to make any major price moves
in the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the
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GT GLOBAL GROWTH & INCOME FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time 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.
The Fund generally would write put options in circumstances where LGT Asset
Management wishes to purchase the underlying security or currency for the Fund's
portfolio at a price lower than the current market price of the security or
currency. In such event, the Fund would write a put option at an exercise price
that, reduced by the premium received on the option, reflects the lower price it
is willing to pay. Since the Fund also would receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at greater than its market value.
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GT GLOBAL GROWTH & INCOME FUND
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund has the right to sell the underlying security
or currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when LGT
Asset Management 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or an
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL GROWTH & INCOME FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC
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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL GROWTH & INCOME FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund as the call writer will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock price levels in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Fund. The Fund'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 or 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.
The Fund only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
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GT GLOBAL GROWTH & INCOME FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded, and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL GROWTH & INCOME FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is
"in-the-money"if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds 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, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with the
guidelines approved by the Company's Board of Directors.
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GT GLOBAL GROWTH & INCOME FUND
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
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 the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees entering, into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which LGT Asset Management believes will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts,
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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GT GLOBAL GROWTH & INCOME FUND
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash, U.S. government securities or other liquid,
high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Fund
invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
illiquid securities. See "Investment Limitations." Securities may be considered
illiquid if the Fund cannot reasonably expect within seven days to sell the
security approximately the amount at which the Fund values such securities. The
sale of illiquid securities, if they can be sold at all, generally will require
more time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities, such as securities eligible
for trading on U.S. securities exchanges or in the over-the-counter markets.
Moreover, restricted securities which may be illiquid for purposes of this
limitation, often sell, if at all, at a price lower than similar securities that
are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
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GT GLOBAL GROWTH & INCOME FUND
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to LGT Asset Management in accordance
with procedures approved by the Company's Board of Directors. LGT Asset
Management takes into account a number of factors in reaching liquidity
decisions, including, but not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security; (iii) the
number of dealers who have undertaken to make a market in the security; (iv) the
number of other potential purchasers; and (v) the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited and the mechanics of transfer). LGT Asset Management monitors the
liquidity of securities in the Fund's portfolio and periodically reports on such
decisions to the Board of Directors.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, LGT Asset Management 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 on 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 14
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GT GLOBAL GROWTH & INCOME FUND
CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the U.S.,
and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., 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 Fund are uninvested and no return
is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive
opportunities. Inability to dispose of a portfolio security due to settlement
problems either could result in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. LGT
Asset Management will consider such difficulties when determining the allocation
of the Fund's assets, although LGT Asset Management does not believe that such
difficulties will have a material adverse effect on the Fund's portfolio trading
activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EUROPE. The countries that are members of
the European Economic Community ("Common Market") (Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and
the United Kingdom and Germany) eliminated certain import tariffs and quotas and
other trade barriers with respect to one another over the past several years.
LGT Asset Management 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 the Fund.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by the Fund in Japan means that the Fund 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.
Statement of Additional Information Page 15
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GT GLOBAL GROWTH & INCOME FUND
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.
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INVESTMENT LIMITATIONS
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The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information and subject to operating policy (4) below;
(4) Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase over-the-counter options or hold assets set aside to cover
over-the-counter options written by the Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of
the Fund's net assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to operating policy (4) below;
(8) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets at the
lower of cost or fair market value. The Fund will not purchase securities
while borrowings in excess of 5% of its total assets are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage;
(9) 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;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs; or
(11) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Fund, its 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.
For purposes of the concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not: (1) invest in securities of an issuer if
the investment would cause the Fund to own more than 10% of any class of
securities of any one issuer; (2) sell securities short, except to the extent
that the Fund contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short; (3) invest more than
5% of its total assets in securities of companies having, together with their
predecessors, a record of less than three years of continuous operation; or (4)
enter into a futures contract, an option on a futures contract, or an option on
foreign currency traded on a CFTC-regulated exchange, in each case other than
for BONA FIDE hedging purposes (as defined by the CFTC), if the aggregate
initial margin and premiums required to establish all of those positions
(excluding the amount by which options are "in-the-money") exceeds 5% of the
liquidation value of the Fund's portfolio, after taking into account unrealized
profits and unrealized losses on any contracts the Fund has entered into.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Fund's portfolio transactions
and the selection of broker/dealers who execute such transactions on behalf of
the Fund. In executing portfolio transactions, LGT Asset Management seeks the
best net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
Although LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
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 the interests of the Fund, LGT Asset Management may select
brokers to execute the Fund's portfolio transactions, on the basis of the
research and brokerage services they provide to LGT Asset Management for its use
in
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
managing the Fund and its other advisory accounts. Such services may include
furnishing analyses, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such brokers are in addition to,
and not in lieu of, the services required to be performed by LGT Asset
Management under the Management Contract (defined below). A commission paid to
such brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that LGT Asset Management
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of LGT Asset
Management to the Fund and its other clients and that the total commissions paid
by the Fund will be reasonable in relation to the benefits received by the Fund
over the long term. Research services may also be received from dealers who
execute Fund transactions in over-the-counter markets.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Fund toward payment of the Fund's expenses, such
as transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
LGT Asset Management are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases, LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, LGT Asset Management may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which LGT
Asset Management serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and brokers
than in the United States. Foreign security settlements may in some instances be
subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest generally are traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to such affiliates are reasonable and
fair in the context of the market in which they are operating. Any such
transactions will be effected and related compensation paid only in accordance
with applicable SEC regulations.
For the Fund's fiscal years ended October 31, 1995, 1994 and 1993, the Fund paid
aggregate brokerage commissions of $318,958, $280,861 and $382,594,
respectively. For the fiscal year ended October 31, 1994, the Fund paid Bank-in-
Liechtenstein, Frankfurt, as "affiliated broker" as defined in the 1940 Act,
aggregate brokerage commissions of $2,485 for transactions involving purchases
and sales of portfolio securities, which represented 0.89% of the total
brokerage commissions paid by the Fund and 0.35% of the aggregate dollar amount
of transactions involving payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when LGT Asset Management has concluded
that the sale of a security owned by the Fund and/or the purchase of another
security of better value can enhance principal and/or increase income. A
security may be sold to avoid any prospective decline in market value, or a
security may be purchased in anticipation of a market rise. Consistent with the
Fund's investment objective, a security also may be sold and a comparable
security purchased
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
coincidentally in order to take advantage of what is believed to be a disparity
in the normal yield and price relationship between the two securities. Although
the Fund does not intend generally to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever management believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. However, the portfolio turnover rate will not be a
limiting factor when LGT Asset Management deems portfolio changes appropriate.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that the Fund will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to the
Fund's shareholders. For the fiscal years ended October 31, 1995 and 1994, the
Fund's portfolio turnover rates were 83% and 117%, respectively.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella,* 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust since 1995; Director and President of LGT Asset Management Holdings, Inc. ("LGT
50 California St. Asset Management Holdings") since 1988; Director and President of LGT Asset Management
San Francisco, CA 94111 since 1989; Director of GT Global since 1987 and President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and President of G.T.
Insurance from 1992 to 1995. Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
2 Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Ms. 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989; Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995, Senior Vice
Vice President and Chief President - Finance and Administration of GT Global, GT Services and
Financial Officer G.T. Insurance. Senior Vice President -- Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President - Finance of G.T. Insurance from 1992 to 1994; and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President - Mutual Fund Accounting at LGT Asset Management since
Vice President and 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Principal Accounting Officer from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management
Vice President and Secretary Holdings, LGT Asset Management, GT Global, GT Services and G.T.
50 California Street Insurance since February, 1996. Senior Vice President, Secretary and
San Francisco, CA 94111 General Counsel of LGT Asset Management Holdings, LGT Asset Management,
GT Global, GT Services and G.T. Insurance from May 1994 to February
1996. Mr. Lee was the Senior Vice President, General Counsel and
Secretary of Strong/ Corneliuson Management, Inc. and Secretary of each
of the Strong Funds from October 1991 through May 1994. 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 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of G.T. Insurance since 1992 and Assistant General
San Francisco, CA 94111 Counsel of LGT Asset Management Holdings, LGT Asset Management, GT
Global and GT Services since 1991. From 1989 to 1991, Mr. Guarino was an
attorney at The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. From 1993 to
San Francisco, CA 94111 1994, Mr. Thelander was an associate at Kirkpatrick & Lockhart LLP (a
law firm). Prior thereto, he was an attorney with the U.S. Securities
and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc. and G.T. Global Developing
Markets Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a
Trustee of G.T. Greater Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio and Global
Investment Portfolio, which are also registered investment companies managed by
LGT Asset Management. Each Director and officer serves in total as a Director or
Trustee and Officer, respectively, of 10 registered investment companies with 40
series managed or administered by LGT Asset Management. The Company pays each
Director, who is not a director, officer or employee of LGT Asset Management or
any affiliated company, $5,000 per annum, plus $300 per Fund for each meeting of
the Board attended, and reimburses travel and other expenses incurred in
connection with attendance at such meetings. Other Directors and Officers
receive no compensation or expense reimbursement from the Company. For the
fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Ms. Quigley received total compensation of 36,705.30, 34,230.22, 36,755.58 and
33,706.85, respectively, from the Company for which he or she serves as a
Director. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley, who are not directors, officers or employees of
LGT Asset Management or any affiliated company, received total compensation of
$92,176.78, $87,868.84, $92,280.90 and $86,957.55, respectively, from the 40 GT
Global Mutual Funds for which he or she serves as a Director or Trustee. Fees
and expenses disbursed to the Directors contained no accrued or payable pension
or retirement benefits. As of the date of this Statement of Additional
Information, the officers and Directors and their families as a group owned in
the aggregate beneficially or of record less than 1% of the outstanding shares
of the Fund or of all the Company's funds in the aggregate.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
LGT Asset Management serves as the Fund's investment manager and administrator
under an Investment Management and Administration Contract ("Management
Contract") between the Company and LGT Asset Management. As investment manager
and administrator, LGT Asset Management makes all investment decisions for the
Fund and administers the Fund's affairs. Among other things, LGT Asset
Management furnishes the services and pays the compensation and travel expenses
of persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company and the Fund, and provides suitable office space,
necessary small office equipment and utilities. For these services, the Fund
pays LGT Asset Management investment management and administration fees, based
on the Fund's average daily net assets, computed daily and paid monthly, at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million, and .90% on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund, the Company or LGT
Asset Management may terminate the Contract without penalty upon sixty days'
written notice. The Management Contract terminates automatically in the event of
its assignment (as defined in the 1940 Act).
Under the Management Contract, LGT Asset Management has agreed to waive its
investment management and administration fees from the Fund and to reimburse the
Fund to the extent necessary to assure that the Fund's annual expenses
(exclusive of brokerage commissions, organizational expenses, taxes, interest,
distribution-related expenses, certain expenses attributable to investing
outside the U.S. and extraordinary expenses) do not exceed the most stringent
expense limitations prescribed by any state in which the Fund's shares are
offered for sale. Currently, the most restrictive applicable limitation provides
that the Fund's expenses may not exceed an annual rate of 2 1/2% of the first
$30 million of average net assets, 2% of the next $70 million of average net
assets and 1 1/2% of assets in excess of that amount. In addition, LGT Asset
Management and GT Global have voluntarily undertaken to limit the Fund's Class A
share and Class B share expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the maximum annual level of 1.85% and
2.50% of the Fund's average daily net assets of those respective classes of the
Fund, during each fiscal year and LGT Asset Management and GT Global have agreed
to reimburse the Fund if the Fund's expenses exceed that amount.
The following table discloses the amount of investment management and
administration fees paid by the Fund to LGT Asset Management during the Fund's
last three fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 6,301,399
1994....................................................................................................... 5,676,421
1993....................................................................................................... 2,226,185
</TABLE>
The fees shown in the table above do not include the effect of reimbursements of
Fund operating expenses made by LGT Asset Management. During the Fund's fiscal
year ended October 31, 1993, LGT Asset Management reimbursed the Fund for a
portion of the Fund's aggregate operating expenses in the amount of $183,449.
DISTRIBUTION SERVICES
The Fund's Class A and Class B shares are offered continuously through the
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to a Distribution Contract between the Company and GT Global
dated February 24, 1989.
As described in the Prospectus, the Company has adopted separate Distribution
Plans with respect to each class of the Fund 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 Fund under the Plans, as
described in the Prospectus, may not be increased without the approval of the
majority of the outstanding voting securities of the Fund. All expenses for
which GT Global is
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
reimbursed under the Class A Plan will have been incurred within one year of
such reimbursement. The Fund makes no payments to any party other than GT
Global, which is the distributor (principal underwriter) of the Fund's shares.
The Class B Plan took effect on October 22, 1992. The following table discloses
payments made by the Fund to GT Global under the Plans during the Fund's last
fiscal year:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1995................................................................. $ 1,035,465 $ 3,539,336
</TABLE>
In approving the Plans, the 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, determined that each Plan was in the best
interests of the Fund and its shareholders. Agreements related to the Plan 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 shareholders of the Fund on January 20, 1992,
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 the initial sole shareholder of the Class B shares on October
21, 1992.
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, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers who sell shares.The following
table reviews the extent of such activity during the Fund's last three fiscal
years under a sales structure substantially similar to the current Class A
structure:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- --------- ----------
<S> <C> <C> <C>
1995............................................................................... $ 556,296 $ 80,112 $ 476,184
1994............................................................................... 2,299,883 442,313 1,857,570
1993............................................................................... 2,304,000 0 2,304,000
</TABLE>
GT Global receives no compensation or reimbursements relating to its
distribution efforts with respect to Class A shares other than as described
above. GT Global receives any contingent deferred sales charges payable with
respect to redemptions of Class B shares. For the fiscal years ended October 31,
1995 and 1994, and for the period April 1, 1993 to October 31, 1993, GT Global
collected contingent deferred sales charges in the amounts of $1,533,810,
$321,440 and $30,523, respectively. Purchases of Class A shares exceeding
$500,000 may be subject to a contingent deferred sales charge upon redemption.
GT Global collected contingent deferred sales charges in the amount of $19,017
for the fiscal year ended October 31, 1995.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent also is reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationery and office supplies. LGT Asset Management serves
as the Fund's pricing and accounting agent. The monthly fee for these services
to LGT Asset Management is a percentage, not to exceed 0.08% annually, of the
Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by LGT Asset Management ("GT Global Mutual Funds") and 0.02% to the assets in
excess of $6 billion and allocating the result according to each Fund's average
daily net assets.
As of October 31, 1995, the Fund paid LGT Asset Management fees of $40,735 for
such accounting services.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by LGT Asset Management, GT Global and
other agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
as series of the Company are allocated on a basis deemed fair and equitable,
which may be based on the relative net assets of the Fund or the nature of the
services performed and relative applicability to the Fund. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses. The ratio of the Fund's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the 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
each business day the NYSE is open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange 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 LGT Asset
Management to be the primary market.
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
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term investments are
amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing market
rate as determined by LGT Asset Management on that day. When market quotations
for futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or at the mean of the
current bid and asked prices of such currencies against the U.S. dollar last
quoted by a
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
major bank that is a regular participant in the foreign exchange market or on
the basis of a pricing service that takes into account the quotes provided by a
number of such major banks. If none of these alternatives are available, or none
are deemed to provide a suitable methodology for converting a foreign currency
into U.S. dollars, the Board of Directors, in good faith, will establish a
conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Fund's net asset value may not take place contemporaneously with the
determination of the prices of securities held by the Fund. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Fund's net asset value unless LGT Asset Management, under the supervision of
the Company's Board of Directors, determines that the particular event would
materially affect net asset value. As a result, the Fund's net asset value may
be significantly affected by such trading on days when a shareholder cannot
purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment for Fund shares, other than by wire transfer, must be made
by check or money order drawn on a U.S. bank. Checks or money orders must be
payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, 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 cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
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 assure 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 or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT 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 GT Global within 20 business days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the GT Global Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether investment will be in Class A
shares or Class B shares and send the following documents to the Transfer Agent:
(1) an AIP Application; (2) a Bank Authorization Form; and (3) a voided personal
check from the pertinent bank account. The necessary forms are included at the
back of the Fund's prospectus. Providing that an investor's bank accepts the
Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of the 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, a stop payment order or the account is closed, the AIP
may be discontinued, and any share purchase made upon deposit of such check may
be cancelled. Furthermore, the shareholder will be liable for any loss incurred
by 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 30 days' written notice or by the participant, at any time,
without penalty, upon written notice to the Fund or the Transfer Agent.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the Fund may 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 GT Global.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT 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 GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution, if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). 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
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(or partnership) also must submit a "Corporation Resolution" or "Certification
of Partnership" indicating the names, titles, and signatures of the individuals
authorized to act on its behalf, and the SWP application must be signed by a
duly authorized officer(s) and the corporate seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that 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 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which would prohibit the Fund from
disposing of its portfolio securities or in fairly determining the value of its
assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemption in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to qualify or to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, the Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional requirements.
These requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from options,
Futures or Forward Contracts) derived with respect to its business of investing
in securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities, or any of the following, that were held for
less than three months -- options or Futures (other than those on foreign
currencies), or foreign currencies (or options, Futures or Forward Contracts
thereon) that are not directly related to the Fund's principal business of
investing in securities (or options and Futures with respect to securities)
("Short-Short Limitation"); (3) at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. government securities, securities of other RICs and
other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that represents income from foreign sources as his
own income from those sources, and (3) either deduct the taxes deemed paid by
him in computing his taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his federal income
tax. The Fund will report to its shareholders shortly after each taxable year
their respective shares of the Fund's income from sources within, and taxes paid
to, foreign countries if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, of any
gain from disposition of, stock of a PFIC (collectively "PFIC income"), plus
interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income would be included
in the Fund's investment company taxable income and, accordingly, would not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from foreign currencies (except certain gains that
may be excluded by future regulations), and gains from the disposition of
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains or losses). Each Section
988 gain or loss generally is computed separately and treated as ordinary income
or loss. In the case of overlap between Sections 1256 and 988, special
provisions determine the character and timing of any income, gain or loss. The
Fund attempts to monitor Section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz and Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) in Tokyo; LGT
Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd.
located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Fund's 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 Fund, assists in the preparation of the Fund's federal and state
income tax returns and consults with the Company and the Fund as to matters of
accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company and/or the Fund at any time, or to grant the use of
such names to any other company.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return," as referred to in the Prospectus (see "Other
Information -- Performance Information in the Prospectus"), is calculated
separately for Class A, Class B and Advisor Class shares of the Fund, as
follows: Standardized Return ("T") is computed by using the value at the end of
the period ("EV") of a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the SEC:
P(1+T)(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 Fund's Standardized Returns for its Class A shares, stated as average
annualized total returns, for the periods shown were as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1995......................................................................... 1.22%
October 31, 1990 to October 31, 1995................................................................ 9.85%
September 25, 1990 (commencement of operations) through October 31, 1995............................ 9.69%
</TABLE>
The Fund's Standardized Returns for its Class B shares, which were first offered
on October 22, 1992, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- -------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1995....................................................................... 0.57%
October 22, 1992 (commencement of operations) to October 31, 1995................................. 9.69%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Fund may quote non-standardized total returns that do not reflect the effect of
sales charges. Non-Standardized Returns may be quoted from the same or different
time periods for which Standardized Returns are quoted. The Fund's
Non-Standardized Returns for its Class A shares, stated as aggregate total
returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- ------------------------------------------------------------------------------------------------ -----------------------
<S> <C>
Year ended October 31, 1995..................................................................... 6.27%
September 25, 1990 (commencement of operations) through October 31, 1995........................ 68.31%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as aggregate total returns, for the periods
shown, were as follows:
<TABLE>
<CAPTION>
PERIOD AGGREGATE TOTAL RETURN
- ------------------------------------------------------------------------------------------------ -----------------------
<S> <C>
Year ended October 31, 1995..................................................................... 0.57%
October 22, 1992 (commencement of operations) through October 31, 1995.......................... 32.27%
</TABLE>
The Fund's Non-Standardized Returns for its Class A shares, stated as average
annualized total returns for the periods shown, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- --------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1995........................................................................ 6.27%
October 31, 1990 to October 31, 1995............................................................... 10.93%
September 25, 1990 (commencement of operations) through October 31, 1995........................... 10.75%
</TABLE>
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
The Fund's Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
PERIOD NON-STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------- -------------------------
<S> <C>
Year ended October 31, 1995................................................................... 5.57%
October 22, 1992 (commencement of operations) through October 31, 1995........................ 10.23%
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT 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.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
LGT Asset Management, 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 certain
indices relate only to government bonds. Each of these factors will cause the
performance of each Fund to differ from relevant indices.
In addition, GT Global may in its radio, television and other advertising,
employ the use of sound effects such as, for example, sounds of electronic data
being communicated.
The Fund and GT Global may from time to time compare the Fund with the
following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets.
(2) The Lehman Brothers 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, or, in the case of nonrated bonds, BBB by
Fitch Investors Service (excluding Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger") and/or other companies that
rank or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/or other factors. In this
regard, the Fund may be compared to the Fund's "peer group" as defined by
Lipper, CDA/Wiesenberger and/or other firms, as applicable, or to specific
funds or groups of funds within or without such peer group. Morningstar is a
mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) 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.
(9) 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.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(13) 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.
(14) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(15) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(16) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(17) International Financial Statistics, which is produced by the
International Monetary Fund.
(18) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(19) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(20) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's.
(21) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(22) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(23) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(24) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
such financial organizations as Salomon Brothers, Inc., Lehman Brothers, Merrill
Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith Barney,
S.G. Warburg, Jardine Flemming, The Bank for International Settlements, Asian
Development Bank, Bloomberg, L.P. and Ibbottson Associates may be used as well
as information reported by the Federal Reserve and the respective Central Banks
of various nations. In addition, performance rankings, ratings and commentary
reported periodically in national financial publications, included but not
limited to Money Magazine, Smart Money, Global Finance, EuroMoney, Financial
World, Forbes, Fortune, Business Week, Latin Finance, the Wall Street Journal,
Emerging Markets Weekly, Kiplinger's Guide To Personal Finance, Barron's, The
Financial Times, USA Today, The New York Times, Far Eastern Economic Review, The
Economist and Investors Business Digest. Each Fund may compare its performance
to that of other compilations or indices of comparable quality to those listed
above and other indices which may be developed and made available.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including, but
not limited to home appliances, automobiles and clothing, purchased by Americans
are manufactured abroad. GT Global believes that investing globally in the
companies that produce products for U.S. consumers can help U.S. investors seek
protection of the value of their assets against the potentially increasing costs
of foreign manufactured goods. Of course, there can be no assurance that there
will be any correlation between global investing and the costs of such foreign
goods unless there is a corresponding change in value of the U.S. dollar to
foreign currencies. From time to time, GT Global may refer to or advertise the
names of such companies although there can be no assurance that any GT Global
Mutual Fund may own the securities of these companies.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global 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.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the Fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the Fund's historical share price fluctuations or total returns compared
to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable you to make pre-tax contributions. Because of their advantages, these
retirement accounts and plans may produce returns superior to comparable
non-retirement investments. The Fund 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
or 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 roll overs or
transfers from an existing IRA.
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 lower annual administration
expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees.
401(k) plans, a type of profit-sharing plan, additionally permit the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and GT Global will quote information including but
not limited to data regarding: individual countries, regions, world stock
exchanges, and economic and demographic statistics from sources GT Global deems
reliable including, but not limited to, the economic and financial data of the
referenced financial organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International Industry
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management, Inc.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset Management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE LGT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the LGT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee which sets broad guidelines for asset
allocation and currency management based on LGT Asset Management'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 36
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the 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 edge." Interest
payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
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 other 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 pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STANDARD & POOR'S RATINGS SERVICES ("S&P") rates the securities debt of
various entities in categories ranging from "AAA" to "DD" 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 -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
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 indefinable 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 which 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.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest 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. The "D" rating also will be used upon 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.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
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 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity normally will be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This normally will
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios,
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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.
S&P ratings of commercial paper are graded into four categories ranging from
"A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (++) sign designation. A-2 --
Capacity for timely payments on issues with this designation is strong; however,
the relative degree of safety is not as high as for issues designated "A-1."
COMMERCIAL PAPER RATINGS
The Fund may invest only in high quality commercial paper, i.e. commercial paper
rated Prime-1 by Moody's, A-1 by S&P, or, if unrated, judged by LGT Asset
Management to be of comparable quality. Issuers rated Prime-1 by Moody's have,
in Moody's judgment, a superior capacity 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 protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues assigned the A-1 rating by S&P
are regarded by S&P as having the greatest capacity for timely payment. This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1995, and for its
fiscal year then-ended appear on the following pages.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Growth & Income Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Growth & Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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, 1995 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 Growth & Income Fund as of October 31, 1995, 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 15, 1995
Statement of Additional Information Page 41
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (24.5%)
Swiss Bank Corp. - Bearer .............................. SWTZ 34,795 $ 14,287,135 2.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer .................... SWTZ 10,652 11,544,594 1.8
BANKS-MONEY CENTER
National Australia Bank Ltd. ........................... AUSL 1,309,437 11,207,792 1.7
BANKS-MONEY CENTER
CS Holding AG - Registered ............................ SWTZ 98,500 10,067,847 1.6
BANKS-MONEY CENTER
AEGON N.V. ............................................. NETH 189,852 7,206,676 1.1
INSURANCE-LIFE
First Tennessee National Corp. ......................... US 122,700 6,564,450 1.0
BANKS-REGIONAL
Internationale Nederlanden Groep N.V. ................. NETH 105,705 6,303,448 1.0
OTHER FINANCIAL
Mercury Asset Management Group PLC ..................... UK 397,698 5,804,870 0.9
INVESTMENT MANAGEMENT
American General Corp. ................................. US 170,000 5,588,750 0.9
INSURANCE-LIFE
Deutsche Bank AG ....................................... GER 112,500 5,089,800 0.8
BANKS-MONEY CENTER
ABN AMRO Holding N.V. .................................. NETH 115,974 4,872,672 0.8
BANKS-REGIONAL
MAI PLC: .............................................. UK -- -- 0.7
OTHER FINANCIAL
Convertible Preferred, 5.9% till 12/31/49 ............ -- 1,463,200 2,798,280 --
Common ............................................... -- 374,000 1,932,954 --
National Westminster Bank PLC ......................... UK 471,800 4,705,323 0.7
BANKS-MONEY CENTER
IKB Deutsche Industriebank AG ......................... GER 23,600 4,418,816 0.7
BANKS-REGIONAL
Generale de Banque S.A. ................................ BEL 13,420 4,343,402 0.7
BANKS-MONEY CENTER
Lloyds Abbey Life PLC ................................. UK 599,000 4,336,052 0.7
INSURANCE-LIFE
General Accident PLC ................................... UK 400,000 4,071,440 0.6
INSURANCE - PROPERTY-CASUALTY
Sun Hung Kai Properties Ltd. ........................... HK 494,500 3,949,629 0.6
REAL ESTATE
Dresdner Bank AG ....................................... GER 132,350 3,536,105 0.6
BANKS-MONEY CENTER
Commercial Union PLC ................................... UK 361,550 3,514,355 0.6
INSURANCE - MULTI-LINE
Fortis Amev N.V. ....................................... NETH 54,017 3,392,322 0.5
OTHER FINANCIAL
Kredietbank N.V. ....................................... BEL 12,980 3,258,465 0.5
BANKS-REGIONAL
M & G Group PLC ........................................ UK 155,000 3,197,013 0.5
INVESTMENT MANAGEMENT
Sparebanken NOR (Union Bank of Norway) ................. NOR 112,000 2,968,293 0.5
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 42
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Gerrard & National Holdings PLC ........................ UK 375,880 $ 2,631,813 0.4
SECURITIES BROKER
Henderson Investment Ltd. .............................. HK 2,691,000 2,192,842 0.3
REAL ESTATE
Banco de Santander S.A. ............................... SPN 48,750 2,127,389 0.3
BANKS-MONEY CENTER
Bank of Montreal ...................................... CAN 88,000 1,954,752 0.3
BANKS-REGIONAL
Hopewell Holdings ..................................... HK 2,631,000 1,659,008 0.3
REAL ESTATE
Amoy Properties Ltd. .................................. HK 1,581,500 1,523,978 0.2
REAL ESTATE
Societe Generale Paris ................................. FR 12,280 1,404,218 0.2
BANKS-MONEY CENTER
Banco Popular Espanol S.A. ............................. SPN 7,880 1,253,328 0.2
BANKS-MONEY CENTER
UAP Compagnie .......................................... FR 42,367 1,100,667 0.2
INSURANCE - MULTI-LINE
Compagnie Financiere de Paribas S.A. ................... FR 18,332 1,008,757 0.2
OTHER FINANCIAL
Realty Development Corp., Ltd. "A" .................... HK 280,000 800,393 0.1
REAL ESTATE
Commerzbank AG ......................................... GER 2,250 520,891 0.1
BANKS-MONEY CENTER
------------
157,138,519
------------
Energy (11.4%)
Elektrowatt AG ......................................... SWTZ 45,508 13,753,850 2.1
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. .............................. NETH 80,550 9,999,838 1.6
OIL
Electrabel S.A. ........................................ BEL 34,760 7,812,586 1.2
ELECTRICAL & GAS UTILITIES
Exxon Corp. ............................................ US 91,300 6,973,038 1.1
OIL
Pacific Gas and Electric Co. ........................... US 220,000 6,462,500 1.0
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................ US 63,800 6,427,850 1.0
OIL
Reunies Electrobel & Tractebel S.A. .................... BEL 11,587 4,246,964 0.7
ELECTRICAL & GAS UTILITIES
Groupe Bruxelles Lambert S.A. .......................... BEL 31,025 4,001,496 0.6
OIL
Shell Transport & Trading Co., PLC ..................... UK 324,700 3,792,529 0.6
OIL
Elf Aquitaine .......................................... FR 52,475 3,574,547 0.6
OIL
British Gas PLC ........................................ UK 859,500 3,273,898 0.5
GAS PRODUCTION & DISTRIBUTION
Iberdrola S.A. ........................................ SPN 134,000 1,011,238 0.2
ELECTRICAL & GAS UTILITIES
Union Electrica Fenosa S.A. ............................ SPN 206,000 959,790 0.2
ELECTRICAL & GAS UTILITIES
Groupe Bruxelles Lambert S.A. - VVPR ................... BEL 742 95,701 --
OIL
------------
72,385,825
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industries (8.1%)
Broken Hill Proprietary Co., Ltd. ...................... AUSL 939,403 $ 12,718,996 2.0
MISC. MATERIALS & COMPONENTS
Amcor Ltd. ............................................. AUSL 1,121,546 8,403,908 1.3
PAPER/PACKAGING
Monsanto Co. ........................................... US 65,800 6,892,550 1.1
CHEMICALS
Solvay S.A. "A" ........................................ BEL 11,754 5,933,900 0.9
CHEMICALS
Akzo Nobel N.V. ........................................ NETH 51,450 5,859,040 0.9
CHEMICALS
RWE AG ................................................. GER 13,462 4,792,483 0.8
MISC. MATERIALS & COMPONENTS
BASF AG ................................................ GER 18,080 3,969,815 0.6
CHEMICALS
CRA Ltd. ............................................... AUSL 132,200 2,037,563 0.3
METALS - NON-FERROUS
St Laurent Paperboard, Inc.-/- ......................... CAN 80,000 1,157,321 0.2
FOREST PRODUCTS
------------
51,765,576
------------
Services (6.0%)
Telecom Corporation of New Zealand Limited ............. NZ -- -- 1.5
TELEPHONE NETWORKS
Common ............................................... -- 2,082,600 8,640,297 --
ADR{\/} .............................................. -- 19,000 1,261,125 --
McGraw-Hill, Inc. ...................................... US 81,000 6,631,875 1.0
BROADCASTING & PUBLISHING
Dun & Bradstreet Corp. ................................. US 109,800 6,560,550 1.0
BROADCASTING & PUBLISHING
Granada PLC, Convertible Preferred, 7.5% till
4/30/03 .............................................. UK 1,040,000 3,887,466 0.6
LEISURE & TOURISM
THORN EMI PLC .......................................... UK 140,000 3,259,365 0.5
LEISURE & TOURISM
Royal PTT Nederland N.V. ............................... NETH 86,335 3,036,497 0.5
TELEPHONE NETWORKS
British Telecommunications PLC ......................... UK 359,000 2,133,460 0.3
TELEPHONE NETWORKS
Tele Danmark AS "B" .................................... DEN 39,394 2,055,226 0.3
TELEPHONE NETWORKS
Cathay Pacific Airways ................................. HK 1,393,000 2,054,041 0.3
TRANSPORTATION - AIRLINES
------------
39,519,902
------------
Consumer Non-Durables (4.4%)
Philip Morris Cos., Inc. ............................... US 85,000 7,182,500 1.1
FOOD
Avon Products, Inc. ................................... US 91,000 6,472,375 1.0
PERSONAL CARE/COSMETICS
Universal Corp. ........................................ US 280,500 5,890,500 0.9
TOBACCO
Fleming Cos., Inc. ..................................... US 206,700 4,676,588 0.7
FOOD
Brown-Forman Corp. "B" ................................. US 84,300 3,213,938 0.5
BEVERAGES - ALCOHOLIC
Dairy Farm International Holdings Ltd.{\/} ............. HK 1,390,000 1,139,800 0.2
FOOD
------------
28,575,701
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (3.7%)
General Electric PLC .................................. UK 1,473,000 $ 7,310,289 1.1
AEROSPACE/DEFENSE
BICC PLC ............................................... UK 1,221,500 5,058,211 0.8
INDUSTRIAL COMPONENTS
Lockheed Martin Corp. .................................. US 69,545 4,737,753 0.7
AEROSPACE/DEFENSE
Siemens AG ............................................ GER 6,953 3,646,212 0.6
TELECOM EQUIPMENT
TransCanada Pipelines Ltd. ............................. CAN 145,000 1,935,246 0.3
MACHINERY & ENGINEERING
Thomson CSF S.A. ....................................... FR 62,560 1,304,053 0.2
AEROSPACE/DEFENSE
Trafalgar House PLC ................................... UK 131,000 47,621 --
MACHINERY & ENGINEERING
------------
24,039,385
------------
Health Care (2.8%)
Bristol Myers Squibb Co. .............................. US 138,700 10,575,875 1.7
PHARMACEUTICALS
Bayer AG ............................................... GER 25,860 6,879,829 1.1
PHARMACEUTICALS
------------
17,455,704
------------
Multi-Industry/Miscellaneous (2.0%)
VEBA AG ................................................ GER 170,200 6,989,169 1.1
CONGLOMERATE
Hutchison Whampoa ...................................... HK 565,000 3,113,230 0.5
CONGLOMERATE
Brascan Ltd. "A" ....................................... CAN 179,000 2,806,690 0.4
CONGLOMERATE
------------
12,909,089
------------
Consumer Durables (1.4%)
GKN PLC ............................................... UK 685,800 8,730,686 1.4
------------
AUTO PARTS
Technology (0.3%)
Alcatel Alsthom Compagnie Generale d'Electricite ....... FR 21,860 1,867,390 0.3
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $351,769,551) ............ 414,387,777 64.6
------------ -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (29.1%)
Canada (0.6%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 5,000,000 4,039,424 0.6
Denmark (1.1%)
Kingdom of Denmark, 8% due 3/15/06 ................... DKK 40,000,000 7,361,060 1.1
Germany (7.8%)
Deutschland Republic:
6.75% due 4/22/03 ................................. DEM 26,000,000 19,014,567 3.0
6.25% due 1/4/24 ................................... DEM 23,000,000 14,449,975 2.3
Bundesschatzanweisungen, 6.875% due 12/2/98 .......... DEM 14,635,000 10,984,829 1.7
Treuhandanstalt, 6.375% due 7/1/99 ................... DEM 7,000,000 5,181,980 0.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Italy (1.9%)
Italian Buoni Del Tesoro Poliennali (BTPS), 8.50% due
8/1/04 .............................................. ITL 23,000,000,000 $ 11,997,457 1.9
New Zealand (1.2%)
New Zealand Government, 8% due 4/15/04 ............... NZD 11,000,000 7,610,947 1.2
Spain (1.5%)
Kingdom of Spain, 8% due 5/30/04 ..................... ESP 1,350,000,000 9,399,393 1.5
Sweden (2.2%)
Swedish Government, 6% due 2/9/05 .................... SEK 117,600,000 14,292,473 2.2
United Kingdom (4.6%)
Conversion, 9.5% due 4/18/05 ........................ GBP 10,500,000 18,244,725 2.8
United Kingdom Treasury:
6% due 8/10/99 ..................................... GBP 3,865,000 5,852,937 0.9
8% due 12/7/15 ..................................... GBP 3,500,000 5,466,157 0.9
United States (8.2%)
United States Treasury Note:
7.25% due 5/15/04 ................................. USD 16,600,000 17,881,351 2.8
7.5% due 2/15/05 ................................... USD 8,050,000 8,849,969 1.4
6.5% due 8/15/05 ................................... USD 4,000,000 4,136,252 0.6
United States Treasury Bond:
6.875% due 8/15/25 ................................. USD 11,500,000 12,322,975 1.9
6.25% due 8/15/23 ................................. USD 10,000,000 9,762,500 1.5
------------
Total Government & Government Agency Obligations (cost
$177,666,101) ........................................... 186,848,971
------------
Corporate Bonds (5.1%)
Canada (0.2%)
St. Laurent Paperboard Inc., Convertible Bond, 8% due
6/15/04 ............................................. CAD 1,080,000 1,056,373 0.2
Germany (1.4%)
Deutsche Bank AG, 9% due 12/31/02+/+ ................. DEM 5,625,000 4,562,593 0.7
Commerzbank AG, Convertible Bond, 8.40% due
12/31/00+ ........................................... DEM 4,173,000 4,169,145 0.7
IKB Deutsche Industriebank, 6.45% due 3/31/06 ........ DEM 445,700 294,536 --
United Kingdom (2.5%)
Daily Mail & General Trust, Convertible Bond, 5.75%
due 9/26/03 ......................................... GBP 3,405,000 6,899,336 1.1
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 ............................................. GBP 3,485,000 5,990,102 0.9
Elf Enterprises Finance PLC, 8.75% due 6/27/06 ....... GBP 1,465,000 2,298,107 0.4
Trafalgar House PLC, Convertible Bond, 6% due
1/31/49 ............................................. GBP 1,236,000 908,393 0.1
United States (1.0%)
Siemens Capital Corp., 8% due 6/24/02+/+ ............. USD 4,710,000 6,405,600 1.0
------------
Total Corporate Bonds (cost $31,805,823) ................ 32,584,185
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $209,471,924) ....... 219,433,156 34.2
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
No. of Market % of Net
Warrants (0.0%) Country Warrants Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Henderson Investment Warrants, expire 3/31/96 (cost
$0)-/- ................................................ HK 269,100 $ 14,271 --
------------ -----
INVESTMENT MANAGEMENT
<CAPTION>
Market % of Net
Repurchase Agreement (0.1%) Value Assets {d}
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80% collateralized by $1,310,000 U.S. Treasury
Strips, due 2/15/02 (market value of collateral is
$906,610, including accrued interest) (cost $877,141)
...................................................... 877,141 0.1
------------ -----
TOTAL INVESTMENTS (cost $562,118,616) .................... 634,712,345 98.9
Other Assets and Liabilities ............................. 7,097,240 1.1
------------ -----
NET ASSETS ............................................... $641,809,585 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $641,809,585.
{\/} U.S. currency denominated.
-/- Non-income producing security.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $562,357,582 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 86,308,381
Unrealized depreciation: (13,953,618)
-------------
Net unrealized appreciation: $ 72,354,763
-------------
-------------
</TABLE>
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
<TABLE>
<S> <C> <C> <C> <C>
following countries:
<CAPTION>
<S> <C> <C> <C> <C>
Percentage of Net Assets {d}
-------------------------------------------
<CAPTION>
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.3 5.3
Belgium (BEL/BEF) ................... 4.6 4.6
Canada (CAN/CAD) ..................... 1.2 0.8 2.0
Denmark (DEN/DKK) .................... 0.3 1.1 1.4
France (FR/FRF) ...................... 1.7 1.7
Germany (GER/DEM) .................... 6.4 9.2 15.6
Hong Kong (HK/HKD) ................... 2.5 2.5
Italy (ITLY/ITL) ..................... 1.9 1.9
Netherlands (NETH/NLG) ............... 6.4 6.4
New Zealand (NZ/NZD) ................. 1.5 1.2 2.7
Norway (NOR/NOK) ..................... 0.5 0.5
Spain (SPN/ESP) ...................... 0.9 1.5 2.4
Sweden (SWDN/SEK) .................... 2.2 2.2
Switzerland (SWTZ/CHF) ............... 7.7 7.7
United Kingdom (UK/GBP) .............. 10.9 7.1 18.0
United States (US/USD) ............... 14.7 9.2 1.2 25.1
------ --- --- -----
Total ............................... 64.6 34.2 1.2 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $641,809,585.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 47
<PAGE>
G.T. GLOBAL GROWTH & INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Sell: (U.S. Dollars) Price Date (Depreciation)
- --------------------------------------------------------------------------- -------------- ----------- --------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks............................................................. 32,968,774 1.37500 01/24/96 $ 631,227
Dutch Guilders............................................................. 12,674,263 1.58183 11/15/95 (30,640)
Dutch Guilders............................................................. 697,084 1.64532 11/15/96 (28,522)
French Francs.............................................................. 1,462,617 4.81600 11/06/96 22,019
French Francs.............................................................. 3,947,691 4.90035 11/16/95 (9,463)
Swiss Francs............................................................... 15,511,679 1.21830 11/17/95 (1,065,319)
-------------- --------------
Total Contracts to Sell (Receivable amount $66,781,410)................ 67,262,108 (480,698)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 10.48%
Total Open Forward Foreign Currency Contracts.......................... $ (480,698)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $562,118,616)
(Note 1)................................................. $634,712,345
U.S. currency.............................. $2,148,396 --
Foreign currencies (cost $86,368).......... 86,113 2,234,509
----------
Interest and interest withholding tax reclaims
receivable............................................... 6,136,649
Dividends and dividend withholding tax reclaims
receivable............................................... 1,839,340
Receivable for Fund shares sold........................... 1,589,616
Miscellaneous receivable.................................. 57,542
Cash held as collateral for securities loaned (Note 1).... 66,191,073
------------
Total assets............................................ 712,761,074
------------
Liabilities:
Payable for Fund shares repurchased....................... 1,909,711
Payable for forward foreign currency contracts -- closed
(Note 1)................................................. 1,061,853
Payable for investment management and administration fees
(Note 2)................................................. 530,977
Payable for open forward foreign currency contracts, net
(Note 1)................................................. 480,698
Payable for service and distribution expenses (Note 2).... 382,987
Payable for printing and postage expenses................. 157,836
Payable for transfer agent fees (Note 2).................. 109,594
Payable for custodian fees (Note 1)....................... 36,195
Payable for professional fees............................. 33,921
Payable for registration and filing fees.................. 30,951
Payable for fund accounting fees (Note 2)................. 13,794
Distribution payable...................................... 5,449
Payable for Directors' fees and expenses (Note 2)......... 2,315
Other accrued expenses.................................... 4,135
Collateral for securities loaned (Note 1)................. 66,191,073
------------
Total liabilities....................................... 70,951,489
------------
Net assets.................................................. $641,809,585
------------
------------
Class A:
Net asset value and redemption price per share ($284,069,241
DIVIDED BY 44,716,651 shares outstanding).................. $ 6.35
------------
------------
Maximum offering price per share (100/95.25 of $6.35) *..... $ 6.67
------------
------------
Class B:+
Net asset value and offering price per share ($356,796,017
DIVIDED BY 56,149,732 shares outstanding).................. $ 6.35
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share ($944,327 DIVIDED BY 148,711 shares
outstanding)............................................... $ 6.35
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................. $585,988,405
Undistributed net investment income....................... 3,503,788
Accumulated net realized loss on investments and foreign
currency transactions.................................... (19,973,849)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies........................ (302,488)
Net unrealized appreciation of investments................ 72,593,729
------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $641,809,585
------------
------------
<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 49
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................. $ 20,124,306
Dividend income (net of foreign withholding tax of
$1,834,759)................................................ 15,986,542
------------
Total investment income................................... 36,110,848
------------
Expenses:
Investment management and administration fees (Note 2)...... 6,301,399
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,035,465
Class B.................................. 3,539,336 4,574,801
------------
Transfer agent fees (Note 2)................................ 1,373,300
Custodian fees (Note 1)..................................... 520,103
Printing and postage expenses............................... 413,672
Fund accounting fees (Note 2)............................... 165,947
Registration and filing fees................................ 118,965
Audit fees.................................................. 59,085
Legal fees.................................................. 39,930
Directors' fees and expenses (Note 2)....................... 17,950
Amortization of organization costs (Note 1)................. 17,648
Insurance expenses.......................................... 12,047
------------
Total expenses before reductions.......................... 13,614,847
------------
Expense reductions (Notes 1 & 5)........................ (232,599)
------------
Total net expenses........................................ 13,382,248
------------
Net investment income......................................... 22,728,600
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 13,795,663
Net realized loss on foreign currency
transactions.............................. (31,706,057)
------------
Net realized loss during the year......................... (17,910,394)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (583,752)
Net change in unrealized appreciation of
investments............................... 32,281,086
------------
Net unrealized appreciation during the year............... 31,697,334
------------
Net realized and unrealized gain on investments and foreign
currencies................................................... 13,786,940
------------
Net increase in net assets resulting from operations.......... $ 36,515,540
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 22,728,600 $ 17,564,361
Net realized gain (loss) on investments and
foreign currency transactions............. (17,910,394) 8,687,940
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (583,752) (1,672,868)
Net change in unrealized appreciation
(depreciation) of investments............. 32,281,086 (9,822,058)
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 36,515,540 14,757,375
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (10,790,288) (9,757,675)
From net realized gain on investments...... (506,546) (3,136,804)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (10,618,028) (7,806,686)
From net realized gain on investments...... (580,255) (2,807,047)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (18,236) --
----------------- -----------------
Total distributions...................... (22,513,353) (23,508,212)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 150,425,919 385,623,629
Decrease from capital shares repurchased... (199,707,569) (101,979,754)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (49,281,650) 283,643,875
----------------- -----------------
Total increase (decrease) in net assets...... (35,279,463) 274,893,038
Net assets:
Beginning of year.......................... 677,089,048 402,196,010
----------------- -----------------
End of year................................ $ 641,809,585 $ 677,089,048
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1995 1994 1993(D) 1992 1991
--------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
--------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income................. 0.24 0.22 0.24* 0.21* 0.27*
Net realized and unrealized gain
(loss) on investments................ 0.13 (0.03) 1.05 0.10 0.47
--------- ----------- ----------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.37 0.19 1.29 0.31 0.74
--------- ----------- ----------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.22) (0.21) (0.24) (0.14) (0.26)
From net realized gain on
investments.......................... (0.01) (0.06) -- (0.14) --
From sources other than net investment
income............................... -- -- (0.04) -- --
--------- ----------- ----------- ---------- ----------
Total distributions................. (0.23) (0.27) (0.28) (0.28) (0.26)
--------- ----------- ----------- ---------- ----------
Net asset value, end of period.......... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25
--------- ----------- ----------- ---------- ----------
--------- ----------- ----------- ---------- ----------
Total investment return (e)............. 6.27% 3.14% 25.1% 5.9% 15.68%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $284,069 $317,847 $251,428 $27,754 $71,376
Ratio of net investment income to
average net assets..................... 3.85% 3.30% 3.3%* 4.1%* 5.0%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.70% 1.67% 1.8%* 1.9%* 1.9%*
Without expense reductions............ 1.74% --%** --%** --%** --%**
Portfolio turnover rate++++............. 83% 117% 24% 53% 46%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.005, $0.02, and $0.03 for the year ended
October 31, 1993, 1992 and 1991, respectively. Without such
reimbursements, the expense ratios would have been 1.93%, 2.20% and
2.46% and the net investment income to average net assets would have
been 3.2%, 3.70% and 4.40%, for the year ended October 31, 1993, 1992
and 1991, respectively.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
------------------------------------------------------ CLASS+++
OCTOBER 22, ------------
YEAR ENDED 1992 JUNE 1, 1995
OCTOBER 31, TO TO
------------------------------------- OCTOBER 31, OCTOBER 31,
1995 1994 1993(D) 1992(D) 1995
--------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.21 $ 6.29 $ 5.28 $ 5.29 $ 6.24
--------- ----------- ----------- ------- ------------
Income from investment operations:
Net investment income................. 0.20 0.18 0.20 0.01 0.11
Net realized and unrealized gain
(loss) on investments................ 0.13 (0.03) 1.05 (0.02) 0.13
--------- ----------- ----------- ------- ------------
Net increase (decrease) from
investment operations.............. 0.33 0.15 1.25 (0.01) 0.24
--------- ----------- ----------- ------- ------------
Distributions to shareholders:
From net investment income............ (0.18) (0.17) (0.20) -- (0.13)
From net realized gain on
investments.......................... (0.01) (0.06) -- -- --
From sources other than net investment
income............................... -- -- (0.04) -- --
--------- ----------- ----------- ------- ------------
Total distributions................. (0.19) (0.23) (0.24) -- (0.13)
--------- ----------- ----------- ------- ------------
Net asset value, end of period.......... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 6.35
--------- ----------- ----------- ------- ------------
--------- ----------- ----------- ------- ------------
Total investment return (e)............. 5.57% 2.48% 24.3% (0.2)%(a) 3.83%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $356,796 $359,242 $150,768 $ 280 $ 944
Ratio of net investment income to
average net assets..................... 3.20% 2.65% 2.6% N/A(c) 4.20%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.35% 2.32% 2.5% N/A(c) 1.35%(b)
Without expense reductions............ 2.39% --%** --%** --%**(c) 1.39%(b)
Portfolio turnover rate++++............. 83% 117% 24% 53% 83%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.005, $0.02, and $0.03 for the year ended
October 31, 1993, 1992 and 1991, respectively. Without such
reimbursements, the expense ratios would have been 1.93%, 2.20% and
2.46% and the net investment income to average net assets would have
been 3.2%, 3.70% and 4.40%, for the year ended October 31, 1993, 1992
and 1991, respectively.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Growth & Income 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 twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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
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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than investments
in securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." 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 Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 Fund may use options to manage its exposure to the
stock or bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock or bond 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 collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $62,622,697
were on loan to brokers. The loans were secured by cash collateral of
$66,191,073. 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 period ended October 31, 1995, the Fund received $192,015 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$24,154,904, which expires in 2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $107,435. These
expenses have been amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the 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.
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$80,112 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $19,017 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSC's in
the amount of $1,533,810. 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
ended October 31, 1995, the Fund paid fund accounting fees of $40,735 to G.T.
Capital.
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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments and U.S. government
obligations, aggregated $445,884,925 and $478,744,953, respectively. Purchases
and sales of U.S. government obligations were $64,778,477 and $57,362,609,
respectively, for the year ended October 31, 1995.
4. CAPITAL SHARES
At October 31, 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
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. Latin
America Growth Fund; 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; 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 High
Income Fund; and 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- -------------------------
CLASS A: SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 11,447,072 $ 70,539,906 18,375,623 $ 115,141,878
Shares issued in connection with reinvestment of distributions............. 1,579,506 9,534,463 1,777,962 10,875,825
----------- ------------- ---------- -------------
13,026,578 80,074,369 20,153,585 126,017,703
Shares repurchased......................................................... (19,470,580) (119,773,578) (8,951,499) (55,403,713)
----------- ------------- ---------- -------------
Net increase (decrease).................................................... (6,444,002) $ (39,699,209) 11,202,086 $ 70,613,990
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- -------------------------
CLASS B: SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 9,868,499 $ 60,082,182 39,929,440 $ 250,659,375
Shares issued in connection with reinvestment of distributions............. 1,542,069 9,322,768 1,464,527 8,946,551
----------- ------------- ---------- -------------
11,410,568 69,404,950 41,393,967 259,605,926
Shares repurchased......................................................... (13,074,922) (79,926,629) (7,536,482) (46,576,041)
----------- ------------- ---------- -------------
Net increase (decrease).................................................... (1,664,354) $ (10,521,679) 33,857,485 $ 213,029,885
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 146,947 $ 928,364
Shares issued in connection with reinvestment of distributions............. 2,927 18,236
----------- -------------
149,874 946,600
Shares repurchased......................................................... (1,163) (7,362)
----------- -------------
Net increase............................................................... 148,711 $ 939,238
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
5. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $40,584 under these arrangements.
6. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's investment manager and
administrator, currently named G.T. Capital Management, Inc., will be changed to
"LGT Asset Management, Inc.", and G.T. Global Financial Services, Inc., which
serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was $0.228 per share (representing an approximate total of $22,862,317).
The total amount of taxes paid by the Fund to such countries was approximately
$0.019 per share (representing a total of $1,834,759).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$3,288,542 as capital gain dividends for the fiscal year ended October 31, 1995.
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 61
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 62
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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
GROWTH & INCOME FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
GRPSA602
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
GT Global Latin America Growth Fund ("Fund") is a non-diversified mutual fund
organized as a separate series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end management investment company. This Statement of Additional
Information relating to the Class A and Class B shares of the Fund is not a
prospectus and supplements and should be read in conjunction with the Fund's
current Class A and Class B Prospectus dated February 29, 1996. A copy of the
Fund's Prospectus is available without charge by either writing the Fund at the
above address or by calling the Fund at the toll-free telephone number printed
above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 20
Directors and Executive Officers......................................................................................... 22
Management............................................................................................................... 24
Valuation of Fund Shares................................................................................................. 26
Information Relating to Sales and Redemptions............................................................................ 27
Taxes.................................................................................................................... 29
Additional Information................................................................................................... 32
Investment Results....................................................................................................... 33
Description of Debt Ratings.............................................................................................. 39
Financial Statements..................................................................................................... 41
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund will
normally invest at least 65% of its total assets in securities of a broad range
of Latin American issuers. Under current market conditions, the Fund expects to
invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. Though the Fund can normally
invest up to 35% of its total assets in U.S. securities, the Fund reserves the
right to be primarily invested in U.S. securities for temporary defensive
purposes or pending investment of the proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
LGT Asset Management is the investment manager of the Fund. In determining the
appropriate distribution of investments among various countries for the Fund,
LGT Asset Management ordinarily considers the following factors: prospects for
relative economic growth between the different countries in which the Fund may
invest; expected levels of inflation; government policies influencing business
conditions; the outlook for interest rates; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by the Fund, LGT Asset Management
ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
There may be times when, in the opinion of LGT Asset Management, prevailing
market, economic or political conditions warrant reducing the proportion of the
Fund's assets invested in equity securities and increasing the proportion held
in cash or short-term obligations denominated in U.S. dollars or other
currencies. A portion of the Fund's assets normally will be held in U.S. dollars
or short-term interest-bearing dollar-denominated securities to provide for
ongoing expenses and redemptions.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital, or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
(the "1940 Act") from purchasing the securities of any foreign company that, in
its most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
Latin American countries, commercial banks act as securities broker/dealers,
investment advisers and underwriters or otherwise engage in securities-related
activities, which may limit the Fund's ability to hold securities issued by
banks. The Securities and Exchange Commission ("SEC") has proposed a rule which,
if adopted, may permit the Fund to invest in certain of these securities subject
to certain restrictions. The proposed rule excepts from the prohibition of the
1940 Act any acquisition by an investment company of securities of
securities-related companies provided that certain percentage limitations are
adhered to. The Fund has obtained an exemption from the SEC to permit the Fund
to invest in a manner that is consistent with the SEC's proposed rule.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. The Fund
intends to acquire Sovereign Debt, as defined in the Prospectus, to hold and
trade in appropriate circumstances as described in the Prospectus, as well as to
use to participate in Latin American debt conversion programs. LGT Asset
Management will evaluate opportunities to enter into debt conversion
transactions as they arise but does not currently intend to invest more than 5%
of the Fund's assets in such programs.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible 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 evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by the Fund in units or attached to
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by vote
of a majority of the Company's Board of Directors without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 25% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. 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 LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
to repurchase were less than the repurchase price, the Fund would suffer a loss.
If the financial institution which is party to the repurchase agreement
petitions for bankruptcy or otherwise becomes subject to bankruptcy or other
liquidation proceedings, there may be restrictions on the Fund's ability to sell
the collateral and the Fund could suffer a loss. However, with respect to
financial institutions whose bankruptcy or liquidation proceedings are subject
to the U.S. Bankruptcy Code, the Fund intends to comply with provisions under
the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its total assets would be invested in such
repurchase agreements and other illiquid investments.
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by LGT Asset
Management to present minimal credit risks in accordance with guidelines
established by the Company's Board of Directors, or the Fund's Board of
Trustees, as applicable. LGT Asset Management will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements, which involve the sale of
a security by the Fund and its agreement to repurchase the security at a
specified time and price. However, the Fund does not currently intend to engage
in reverse repurchase agreements with respect to more than 5% of its total
assets. The Fund will maintain, in a segregated amount with a custodian, cash,
U.S. government securities or other liquid, high grade debt securities in an
amount sufficient to cover its obligations under reverse repurchase agreements
with broker/dealers. No segregation is required for reverse repurchase
agreements with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker-dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund will also be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 LGT Asset
Management'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 LGT Asset Management 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 the Fund entered into a
short hedge because LGT Asset Management projected a decline in the price of
a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options will generally be written on securities and currencies that, in the
opinion of LGT Asset Management are not expected to make any major price moves
in the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the
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GT GLOBAL LATIN AMERICA GROWTH FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time 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.
The Fund would generally write put options in circumstances where LGT Asset
Management wishes to purchase the underlying security or currency for the Fund's
portfolio at a price lower than the current market price of the security or
currency. In such event, the Fund would write a put option at an exercise price
that, reduced by the premium received on the option, reflects the lower price it
is willing to pay. Since the Fund would also receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
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PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when LGT Asset
Management 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.
The Fund may also purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options may also be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL LATIN AMERICA GROWTH FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL LATIN AMERICA GROWTH FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in or
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Treasury Bills on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Treasury Bills on the same
exchange. In such instance the difference between the price at which the Futures
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GT GLOBAL LATIN AMERICA GROWTH FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL LATIN AMERICA GROWTH FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
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GT GLOBAL LATIN AMERICA GROWTH FUND
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts are usually entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, at the same time
they limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which LGT Asset Management believes will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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GT GLOBAL LATIN AMERICA GROWTH FUND
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash, U.S. government securities or other liquid,
high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in Latin
American countries, any change in the leadership or policies of the governments
of those countries or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse the liberalization of foreign investment policies now
occurring and thereby eliminate any investment opportunities which may currently
exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose a substantial portion of
its investments in such countries. The Fund's investments would similarly be
adversely affected by exchange control regulations in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its total assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all,
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GT GLOBAL LATIN AMERICA GROWTH FUND
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than will the sale of liquid
securities such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities, which may
be illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
the Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act,are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to LGT Asset Management in accordance
with procedures approved by the Company's Board of Directors. LGT Asset
Management takes into account a number of factors in reaching liquidity
decisions, including, but not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security; (iii) the
number of dealers that have undertaken to make a market in the security; (iv)
the number of other potential purchasers; and (v) the nature of the security and
how trading is effected (e.g., the time needed to sell the security, how offers
are solicited and the mechanics of transfer). LGT Asset Management monitors the
liquidity of securities in the Fund's portfolio and periodically reports such
determinations to the Board of Directors. Moreover, as noted in the Prospectus,
certain securities, such as those subject to repatriation restrictions of more
than seven days, will generally be treated as illiquid.
More than 10% of the Fund's total assets may consist of illiquid securities from
time to time either because of adverse events which occur following the purchase
of the securities which cause them to become illiquid or because liquid
securities are sold to meet redemption requests or other needs of the Fund.
Illiquid securities are more difficult to value accurately due to, among other
things, the fact that such securities often trade infrequently or only in
smaller amounts.
On December 31, 1995 the market capitalizations of listed equity securities on
the major exchanges in Argentina, Brazil, Chile and Mexico were US$26.0 billion,
$77.0 billion, $36.9 billion and $59.3 billion, respectively. By comparison, at
December 31, 1995 the market capitalization of the NYSE alone was US$6.0
trillion. A high proportion of the shares of many Latin American companies may
be held by a limited number of persons, which may further limit the number of
shares available for investment by the Fund. A limited number of issuers in
most, if not all, Latin American securities markets may represent a
disproportionately large percentage of market capitalization and trading value.
The limited liquidity of Latin American securities markets also may affect the
Fund's ability to acquire or dispose of securities at the price and time it
wishes to do so. In addition, certain Latin American securities markets,
including those of Argentina, Brazil, Chile and Mexico, are susceptible to being
influenced by large investors trading significant blocks of securities or by
large dispositions of securities resulting from the failure to meet margin calls
when due.
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GT GLOBAL LATIN AMERICA GROWTH FUND
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. The
stock markets in Brazil declined sharply in mid 1989, and closed briefly,
following a large settlement failure. Another significant decline occurred in
the first quarter of 1990. In 1987, the Mexican stock exchange experienced a
severe correction, its index declining over 70 percent. This market volatility
may result in greater volatility in the Fund's net asset value than would be the
case for companies investing in domestic securities. If the Fund were to
experience unexpected net redemptions, it could be forced to sell securities in
its portfolio without regard to investment merit, thereby decreasing the asset
base over which Fund expenses can be spread and possibly reducing the Fund's
rate of return.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or may limit the investment by foreign persons to only a specific class
of securities of a company that may have less advantageous terms than securities
of the company available for purchase by nationals. Moreover, the national
policies of certain countries may restrict investment opportunities in issuers
or industries deemed sensitive to national interests. In addition, some
countries require governmental approval for the repatriation of investment
income, capital or the proceeds of securities sales by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose restrictions on foreign capital remittances
abroad. The Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
Recent relevant foreign investment restrictions in each of the four principal
economies of Latin America, which are susceptible to significant and immediate
changes, can be summarized in part as follows:
ARGENTINA. Previous restrictions on foreign investment have been abolished
and prior approval of such investment is no longer required (except where
required in specific statutes governing certain activities), ensuring equal
treatment of national and foreign capital applied to economic activities. At
present foreign capital can move freely in and out of Argentina and no foreign
exchange restrictions are applied to dividend or capital gains remittance.
BRAZIL. Under regulations adopted by the government of Brazil, the Fund is
able to purchase Brazilian securities without regard to any diversification or
repatriation restrictions. However, the regulations require that the Fund's
investments be limited to securities issued by publicly-held corporations
acquired on the Brazilian stock exchanges or on over-the-counter markets
organized by the Commissao de Valores Mobiliarios (CVM) or units of certain
Financial Investment Funds. The Fund's authority to invest in Brazil pursuant to
this regulation remains subject to approval by the CVM. In addition, the Fund is
required to appoint a Brazilian administrator to perform certain functions with
respect to its holdings of Brazilian securities.
CHILE. Direct investment by foreign investors in Chile is subject to certain
Chilean investment restrictions, including a requirement that invested capital
must remain in Chile for a minimum of at least one year. The remittance of
dividends and capital gains can be effected without material restrictions on
timing and amount. Indirect investments, however, may be made through already
established investment funds and such investments will not be subject to the
restriction regarding residency of capital, although they will be subject to the
limitations, described above, regarding investments by the Fund in the
securities of other investment companies. In addition to investing indirectly in
the Chilean market, the Fund may establish its own foreign investment fund in
Chile for which a Chilean administrator will be required. The Fund may also gain
access to investment in Chile via the 18 American Depositary Receipts ("ADRs")
currently traded in the U.S. on the New York Stock Exchange. LGT Asset
Management believes these events significantly broadened the Fund's ability to
gain access to the Chilean market.
MEXICO. Generally, foreigners may directly acquire shares of Mexican
companies up to a limit of 49 percent of the share capital of the issuer without
prior approval. Foreigners may acquire shares in the share capital of certain
Mexican listed companies usually reserved to Mexican nationals, and may acquire
in excess of the 49 percent limit referred to above, through trust arrangements
with Nacional Financiera, S.N.C. ("Nafin"), the Mexican government development
finance bank. Under this arrangement Nafin will acquire the securities that the
Fund purchases and then issue Ordinary Certificates of Participation ("CEPOS").
As a holder of the CEPOS, the Fund would have all rights of the shares acquired,
but it would not have voting rights. There are no restrictions on the movement
of capital in and out of Mexico. Dividends and capital gains can also be freely
remitted, subject to any withholding tax.
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GT GLOBAL LATIN AMERICA GROWTH FUND
VENEZUELA. In order to stabilize the country's financial system, the
government suspended foreign exchange trading on July 6, 1994. The market was
"officially" opened July 11, however, the Bolivar did not begin trading until
January 10, 1995 at a level of 212 and 220 (the level held since December 1994).
The Venezuelan Exchange Administration Board issued Resolution No. 41 regarding
foreign investment registration and repatriation for capital dividends and
interest. The Resolution provides that all investment should be registered with
the Superintendency of Foreign Investment (SEIX) and the Technical
Administration Exchange Office (OTAC). Article 2 of the Resolution states that
"investments" is defined as those transactions executed through the local stock
exchange (this prohibits OTC transaction proceeds from being eligible for
repatriation).
Resolution No. 41 also required re-filing by funds previously approved. The Fund
has complied with the regulations and has obtained approval by the Regulatory
Commission. This avoids jeopardizing the assets held by the fund.
In November 1994 the government passed a Resolution allowing foreign investors
to repatriate without restrictions under the new controlled exchange system. It
is now possible to repatriate any capital or income provided that the OTAC has
proof that the investor has obtained a tax identification code and complied with
all tax return filing requirements.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, LGT Asset Management will take appropriate
steps to evaluate the proposed investment, which may include on-site inspection
of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. In addition, for companies that keep accounting records
in local currency, inflation accounting rules in some Latin American countries
require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the company's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. Consequently, data concerning Latin
American securities shown elsewhere in this Statement of Additional Information
may be materially affected by restatements for inflation and may not accurately
reflect the real conditions of companies and securities markets. There is
substantially less publicly available information about foreign companies,
including Latin American companies, and the governments of Latin American
countries than there are reports and ratings published about U.S. companies and
the U.S. Government. In addition, where public information is available, it may
be less reliable than such information regarding U.S. issuers. Issuers of
securities in foreign jurisdictions are generally not subject to the same degree
of regulation as are U.S. issuers with respect to such matters as restrictions
on market manipulation, insider trading rules, shareholder proxy requirements
and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund under normal circumstances will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
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GT GLOBAL LATIN AMERICA GROWTH FUND
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. LGT Asset Management will consider such difficulties
when determining the allocation of the Fund's assets, although LGT Asset
Management does not believe that such difficulties will have a material adverse
effect on the Fund's portfolio trading activities.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Emerging securities
markets, such as the markets of Latin America, are substantially smaller, less
developed, less liquid and more volatile than the major securities markets. The
limited size of emerging securities markets and limited trading volume in
issuers compared to the volume of trading in U.S. securities could cause prices
to be erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets. In addition, securities traded in certain emerging markets may be
subject to risks due to the inexperience of financial intermediaries, a lack of
modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of permanent or temporary termination of
trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the Latin American countries in which the Fund expects
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
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GT GLOBAL LATIN AMERICA GROWTH FUND
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect the Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While LGT Asset Management intends to manage the Fund's
portfolio in a manner that will minimize the exposure to such risks, there can
be no assurance that adverse political changes will not cause the Fund to suffer
a loss of interest or principal on any of its holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, the Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If the Fund were
to experience unexpected net redemptions, it may be forced to sell Sovereign
Debt in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(4) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets (at the
lower of cost or fair market value). The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5%
of its total assets are outstanding. This restriction shall not prevent the
Fund from entering into reverse repurchase agreements, provided that reverse
repurchase agreements, and any other transactions constituting borrowing by
the Fund may not exceed one-third of the Fund's total assets. In the event
that the asset coverage for the Fund's borrowings falls below 300%, the Fund
will reduce, within three days (excluding Sundays and holidays), the amount
of its borrowings in order to provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
For purposes of the Fund's concentration policy contained in limitation (1),
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government are considered to be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies of the
Fund and may be changed by vote of a majority of the Company's Board of
Directors without shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 10% of its total assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
The Fund has the authority to invest up to 10% of its total assets in shares of
other investment companies pursuant to the 1940 Act. The Fund may not invest
more than 5% of its total assets in any one investment company or acquire more
than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Fund's portfolio transactions
and the selection of broker/dealers who execute such transactions on behalf of
the Fund. In executing portfolio transactions, LGT Asset Management seeks the
best net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
While LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, LGT Asset Management may select
brokers to execute the Fund's portfolio transactions on the basis of the
research and brokerage services they provide to LGT Asset Management for its use
in managing the Fund and its other advisory accounts. Such services may include
furnishing analyses, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such brokers are in addition to,
and not in lieu of, the services required to be performed by LGT Asset
Management under the Management Contract (defined below). A commission paid to
such broker/dealers may be higher than that which another qualified broker would
have charged for effecting the same transaction, provided that LGT Asset
Management determines in good faith that such commission is reasonable in terms
either of that particular transaction or the overall responsibility of LGT Asset
Management to the Fund and its other clients and that the total commissions paid
by the Fund will be reasonable in relation to the benefits received by the Fund
over the long term. Research services may also be received from dealers who
execute Fund transactions.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Fund toward payment of the Fund's expenses, such
as transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
LGT Asset Management are made independently of each other in light of differing
conditions. However, the same investment decision may occasionally be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, LGT Asset Management may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which LGT
Asset Management serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
United States transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest are generally traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of Liechtenstein Global Trust. The Company's Board of Directors has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to such affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations. For the Fund's fiscal years ended October 31, 1995,
1994 and 1993, the Fund paid aggregate brokerage commissions of $891,513,
$708,799 and $616,803.
PORTFOLIO TURNOVER AND TRADING
The portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the Fund's average month-end portfolio
value, excluding short-term investments. For purposes of this calculation,
portfolio securities exclude purchases and sales of debt securities having a
maturity at the date of purchase of one year or less. The Fund engages in
portfolio trading when LGT Asset Management has concluded that the sale of a
security owned by the Fund and/or the purchase of another security of better
value can enhance principal and/or increase income. A security may be sold to
avoid any prospective decline in market value, or a security may be purchased in
anticipation of a market rise. Consistent with the Fund's investment objective,
a security also may be sold and a comparable security purchased coincidentally
in order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities. Although the Fund does
not intend generally to trade for short-term profits, the securities in the
Fund's portfolio will be sold whenever management believes it is appropriate to
do so, without regard to the length of time a particular security may have been
held. The Fund's portfolio turnover rate will not be a limiting factor when LGT
Asset Management deems portfolio changes appropriate. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly. The Fund's portfolio turnover rates for
the fiscal years ended October 31, 1995 and 1994 were 125% and 155%,
respectively.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust since 1995; Director and President of LGT Management Holdings, Inc. ("LGT Asset
50 California St. Management Holdings") since 1988; Director and President of LGT Asset Management since
San Francisco, CA 94111 1989; Director of GT Global since 1987 and President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and President of G.T.
Insurance from 1992 to 1995; Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc.; and various other companies. Mr. Anderson also is
Suite 400 a director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Ms. 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989; Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management
Vice President and Secretary Holdings, LGT Asset Management, GT Global, GT Services and G.T.
50 California Street Insurance since February 1996. Mr. Lee was the Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of Strong/Corneliuson Management, Inc. and
Secretary of each of the Strong Funds 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.
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995 Senior Vice
Vice President and Chief President - Finance and Administration of GT Global, GT Services and
Financial Officer G.T. Insurance. Senior Vice President -- Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President - Finance of G.T. Insurance from 1992 to 1994 and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President - Mutual Fund Accounting at LGT Asset Management since
Vice President and 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Principal Accounting Officer from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of G.T. Insurance since 1992 and Assistant General
San Francisco, CA 94111 Counsel of LGT Asset Management Holdings, LGT Asset Management, GT
Global and GT Services since 1991. From 1989 to 1991, Mr. Guarino was an
attorney at The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. From 1993 to
San Francisco, CA 94111 1994, Mr. Thelander was an associate at Kirkpatrick & Lockhart LLP (a
law firm). Prior thereto, he was an attorney with the U.S. Securities
and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc. and G.T. Global Developing
Markets Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a
Trustee of G.T. Greater Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio, Global
Investment Portfolio and Growth Portfolio, which are also registered investment
companies managed by LGT Asset Management. Each Director and Officer serves in
total as a Director and/or Trustee and Officer, respectively, of 10 registered
investment companies with 40 series managed or administered by LGT Asset
Management. The Company pays each Director, who is not a director, officer or
employee of LGT Asset Management or any affiliated company, $5,000 per annum,
plus $300 per Fund for each meeting of the Board attended, and reimburses travel
and other expenses incurred in connection with attendance at such meetings.
Other Directors and officers receive no compensation or expense reimbursement
from the Company. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley, who are not directors, officers or
employees of LGT Asset Management or any affiliated company, received total
compensation of $36,705.30, $34,230.22, $36,755.58 and $33,706.85, respectively,
from the Company for their services as Directors. For the year ended October 31,
1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $92,176.78, $87,868.84, $92,280.90 and $86,957.55, respectively,
from the 40 GT Global Mutual Funds for which he or she serves as a Director or
Trustee. Fees and expenses disbursed to the Directors contained no accrued or
payable pension or retirement benefits. As of the date of this Statement of
Additional Information, the officers and Directors and their families as a group
owned in the aggregate beneficially or of record less than 1% of the outstanding
shares of the Fund or of all the Company's funds in the aggregate.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION
LGT Asset Management serves as the Fund's investment manager and administrator
under an Investment Management and Administration Contract ("Management
Contract") between the Company and LGT Asset Management. As investment manager
and administrator, LGT Asset Management makes all investment decisions for the
Fund and administers the Fund's affairs. Among other things, LGT Asset
Management furnishes the services and pays the compensation and travel expenses
of persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company and the Fund, and provides suitable office space,
necessary small office equipment and utilities.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
LGT Asset Management may terminate the Contract without penalty upon sixty (60)
days' written notice. The Management Contract terminates automatically in the
event of its assignment (as defined in the 1940 Act).
Under the Management Contract, LGT Asset Management has agreed to reimburse the
Fund if the Fund's annual ordinary expenses exceed the most stringent expense
limitations prescribed by any state in which the Fund's shares are offered for
sale. Currently, the most restrictive applicable limitation provides that the
Fund's expenses may not exceed an annual rate of 2 1/2% of the first $30 million
of average net assets, 2% of the next $70 million of average net assets and
1 1/2% of assets in excess of that amount. Expenses which are not subject to
this limitation are interest, taxes, the amortization of organizational
expenses, payments of distribution fees, in part, and extraordinary expenses.
LGT Asset Management and GT Global have undertaken to limit the Fund's Class A
and Class B share expenses to 2.40% and 2.90% of average daily net assets of the
Class A and Class B shares, respectively, and LGT Asset Management has agreed to
reimburse the Fund if the Fund's annual ordinary expenses exceed 2.40% and 2.90%
of average daily net assets of each class (exclusive of brokerage commissions,
interest, taxes, certain expenses attributable to investing outside the U.S. and
extraordinary expenses).
For the fiscal year ended October 31, 1995, the Fund paid management and
administration fees in the amount of $3,913,429 to LGT Asset Management. For the
fiscal year ended October 31, 1994, the Fund paid management and administration
fees in the amount of $3,601,301 to LGT Asset Management. Management and
administration fees in the amount of $1,013,499 were paid to LGT Asset
Management by the Fund for the fiscal year ended October 31, 1993. However,
during that period LGT Asset Management reimbursed fees of $93,920 to the Fund,
with a net payment to LGT Asset Management of $920,579.
Certain Latin American countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Class A and Class B shares are continuously offered through the
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted separate Distribution
Plans with respect to each class of shares of the Fund 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 Fund under the Plans, as
described in the Prospectus, may not be increased without the approval of the
majority of the outstanding voting securities of the affected class. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement. The Fund makes no payments to
any party other than GT Global, which is the distributor (principal underwriter)
of the
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Fund's shares. The Class B Plan took effect on April 1, 1993. The following
table discloses payments made by the Fund to GT Global under the Plans during
the Fund's last fiscal year:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1995.................................................. $ 1,189,722 $ 1,632,783
Year ended October 31, 1994.................................................. 1,263,153 1,204,826
</TABLE>
In approving the Plans, the Directors determined that each Plan was in the best
interests of the Fund and its shareholders. 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 Fund's shareholders on January 20, 1992, 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 LGT Asset Management as initial sole shareholder of the Class B shares of the
Fund on March 31, 1993.
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 they are 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, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers which sell shares. The following
table reviews the extent of such activity for the Fund during the periods shown:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Year ended October 31,
- ------------------------------------------------------------------------------
1995........................................................................ $ 2,082,087 $ 291,788 $ 1,790,299
1994........................................................................ 4,668,275 443,629 4,224,646
1993........................................................................ 558,000 26,490 531,510
</TABLE>
GT Global receives no compensation or reimbursements relating to its
distribution efforts with respect to Class A shares other than as described
above. GT Global receives any contingent deferred sales charges payable with
respect to redemptions of Class B shares. For the fiscal year ended October 31,
1995, GT Global collected contingent deferred sales charges in the amount of
$699,275. For the fiscal year ended October 31, 1994, GT Global collected
contingent deferred sales charges in the amount of $362,155. For the period
April 1, 1993 to October 31, 1993, GT Global did not collect any contingent
deferred sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge upon redemption. GT Global
collected contingent deferred sales charges in the amount of $60,973 for the
fiscal year ended October 31, 1995.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent is also reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationary and office supplies.
LGT Asset Management also serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of all
registered mutual funds advised by LGT Asset Management ("GT Global Mutual
Funds") and 0.02% to the assets in excess of $5 billion and, allocating the
result according to each Fund's average daily net assets. As of October 31,
1995, the Fund paid LGT Asset Management fees of $24,138 for such accounting
services.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by LGT Asset Management, GT Global and
other agents. These expenses include, in addition to the advisory, distribution
and brokerage fees discussed above, legal and audit expenses, custodian and
transfer agency and pricing and accounting fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared by the Fund and other
funds organized as series of the
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Company with one another are allocated on a basis deemed fair and equitable,
which may be based on the relative net assets of the Fund or the nature of the
services performed and relative applicability to the Fund. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses. The ratio of the Fund's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The Fund's portfolio securities and other assets are valued as follows:
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of normal trading on The New York
Stock Exchange, Inc. ("NYSE") (currently 4:00 p.m. Eastern time) (unless
weather, equipment failure or other factors contribute to an earlier closing
time) on each day for which the NYSE is open for business. Currently, the NYSE
is closed on weekends and on certain days relating to the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
Equity securities, including ADRs, ADSs, CDRs 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 LGT Asset Management to be the primary market.
Securities traded in the over-the-counter market are valued at the last
available bid price prior to the time of valuation.
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
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term debt investments
are amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. 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 LGT Asset Management on that day. When market
quotations for futures and options on futures held by the Fund are readily
available, those positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors are also generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
major bank that is a regular participant in the foreign exchange market or on
the basis of a pricing service that takes into account the quotes provided by a
number of such major banks. If none of these alternatives are available or none
are deemed to provide a suitable methodology for converting a foreign currency
into U.S. dollars, the Board of Directors in good faith will establish a
conversion rate for such currency.
Latin American securities trading may not take place on all days on which the
NYSE is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Consequently, the calculation of the Fund's net
asset value may not take place contemporaneously with the determination of the
prices of securities held by the Fund. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of regular trading on the NYSE will not be reflected in the Fund's net asset
value unless LGT Asset Management, under the supervision of the Company's Board
of Directors, determines that the particular event would materially affect net
asset value. As a result, the Fund's net asset value may be significantly
affected by such trading on days when a shareholder cannot purchase or redeem
shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
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 assure 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 or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT 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 GT Global within 20 days after written request, the
appropriate number of escrowed shares will be redeemed and the proceeds paid to
GT Global.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the 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 GT Global.
EXCHANGES BETWEEN FUNDS
A shareholder may exchange shares of the Fund for shares of other GT Global
Mutual Funds, based on their respective net asset values without imposition of
any sales charges provided the registration remains identical. The exchange
privilege is not an option or right to purchase shares but is permitted under
the current policies of the respective GT Global Mutual Funds. The privilege may
be discontinued or changed at any time by any of the funds upon 60 days' written
notice to the shareholders of such fund and is available only in states where
the exchange may be legally made. Class A shares may be exchanged only for Class
A shares of other GT Global Mutual Funds. Class B shares may be exchanged for
Class B shares of other GT Global Mutual Funds. Before purchasing shares through
the exercise of the exchange privilege, a shareholder should obtain and read a
copy of the prospectus of the fund to be purchased and should consider the
investment objectives of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
will be borne by the Fund. Proceeds of less than $1,000 will be mailed to the
shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which makes it not reasonably
practicable for the Fund to dispose of securities owned by it or fairly to
determine the value of its assets, or (3) as the SEC may otherwise permit.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Funds' Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether the investment will be in
Class A shares or Class B shares and send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the prospectus. Providing that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of a 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, a stop payment order or the account is closed,
the AIP may be discontinued, and any share purchase made upon deposit of such
check may be cancelled. Furthermore, the shareholder will be liable for any loss
incurred by a Fund by reason of such cancellation. Investors should allow one
month for the establishment of an AIP. An AIP may be terminated by the Transfer
Agent or the Funds upon 30 days' written notice or by the participant, at any
time, without penalty, upon written notice to the pertinent Fund or the Transfer
Agent.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). 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) also must submit a "Corporation
Resolution" or "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that 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 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Fund from disposing of
its portfolio securities or in fairly determining the value of its assets, or
(3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election will be
irrevocable so long as Rule 18f-1 remains in effect, unless the SEC by order
upon application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- -- options or Futures (other than those on foreign currencies), or foreign
currencies (or options, Futures or Forward Contracts thereon) that are not
directly related to the Fund's principal business of investing in securities (or
options and Futures with
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
respect to securities) ("Short-Short Limitation"); (3) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that represents income from foreign sources as his
own income from those sources, and (3) either deduct the taxes deemed paid by
him in computing his taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his federal income
tax. The Fund will report to its shareholders shortly after each taxable year
their respective shares of the Fund's income from sources within, and taxes paid
to, foreign countries if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from disposition of, stock of a PFIC (collectively "PFIC income"), plus
interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income would be included
in the Fund's investment company taxable income and, accordingly, would not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from foreign currencies (except certain gains that
may be excluded by future regulations), and gains from the disposition of
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities, (or options and Futures with respect thereto) also will be subject
to the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains or losses). Each Section
988 gain or loss generally is computed separately and treated as ordinary income
or loss. In the case of overlap between Sections 1256 and 988, special
provisions determine the character and timing of any income, gain or loss. The
Fund attempts to monitor Section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) Ltd. in
Tokyo, Japan; LGT Asset Management Pte. Ltd., formerly G.T. Management
(Singapore) PTE Ltd. located in Singapore; LGT Asset Management Ltd., formerly
G.T. Management (Australia) Ltd., located in Sydney, Australia; and LGT Asset
Management GmbH, formerly BIL Asset Management GmbH, located in Frankfurt,
Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company and/or the Fund at any time, or to grant the use of
such names to any other company.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return", as referred to in the Prospectus (see "Other
Information -- Performance Information"), is calculated separately for Class A
and Class B shares of the Fund, as follows: Standardized Return ("T") is
computed by using the value at the end of the period ("EV") of a hypothetical
initial investment of $1,000 ("P") over a period of years ("n") according to the
following formula as required by the SEC: P(1+T)(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
Fund's Standardized Return for its Class A shares stated as average annualized
total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (40.15)%
August 13, 1991 (commencement of
operations) to October 31, 1995........ 4.62%
</TABLE>
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns, for the periods shown,
were:
<TABLE>
<CAPTION>
STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (40.35)%
April 1, 1993 (commencement of
operations) to October 31, 1995........ (0.57)%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted.
As discussed in the Prospectus, the Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted.
The Fund's Non-Standardized Returns, for its Class A shares, stated as aggregate
total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
AGGREGATE TOTAL
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.16)%
August 13, 1991 (commencement of
operations) to October 31, 1995........ 27.02%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.42)%
April 1, 1993 (commencement of
operations) to October 31, 1995........ 1.35%
</TABLE>
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
The Fund's Non-Standardized Returns, for its Class A shares, stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.16)%
August 13, 1991 (commencement of
operations) to October 31, 1995........ 5.83%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.42)%
April 1, 1993 (commencement of
operations) to October 31, 1995........ 0.52%
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, market capitalization and
diversification is based on sources believed to be reliable, but is not
all-inclusive nor warranted as to discovery by the Fund or LGT Asset Management.
The authors and publishers of such material are not to be considered as
"experts" under the Securities Act of 1933 on account of the inclusion of such
information herein. Stocks chosen by Morgan Stanley Capital International for
inclusion in its various international market indices may not necessarily
constitute a representative cross-section of the particular markets.
GT Global believes information relating to foreign market performance, market
capitalization and diversification may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in equity and/or debt securities on a global basis.
However, this data is not a representation of the past performance of the Fund
nor is it a prediction of such performance. The performance of the Fund will
differ from the historical performance of the indices represented above. The
performance of indices does not take expenses into account, while the Fund
incurs expenses in its operations that will reduce performance. Moreover, the
Fund is actively managed, i.e. LGT Asset Management as the Fund's investment
manager actively purchases and sells securities in seeking the Fund's investment
objective; this will cause the performance of the Fund to differ from the
indices shown above. Moreover, the Fund's concentration in the equity and debt
securities of Latin American issuers will cause the Fund's performance to differ
from the general equity and bond indices referred to in the historical
performance data provided above.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, 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 Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service (excluding
Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger and/or other firms as
applicable, or to specific funds or groups of funds within or without
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
such peer group. Morningstar is a mutual fund rating service that also rates
mutual funds on the basis of risk-adjusted performance. Morningstar ratings
are calculated from a fund's three, five and ten year average annual returns
with appropriate fee adjustments and a risk factor that reflects fund
performance relative to the three-month U.S. Treasury bill monthly returns.
Ten percent of the funds in an investment category receive five stars and
22.5% receive four stars. The ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) Morgan Stanley Capital International Latin America Emerging Market
Indices, including the Morgan Stanley Emerging Markets Free Latin America
Index (which excludes Mexican banks and securities companies which cannot be
purchased by foreigners) and the Morgan Stanley Emerging Markets Global
Latin America Index. Both indices include 60% of the market capitalization
of the following countries: Argentina, Brazil, Chile and Mexico. The indices
are weighted by market capitalization and are calculated without dividends
reinvested.
(14) International Financial Corporation ("IFC") Latin American Indices
which include 60% of the market capitalization in the covered countries and
are market weighted. One index includes dividends and one excludes
dividends.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and reports produced by the World Bank and its
affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, The Bank for International Settlements,
Asian Development Bank,
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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, GT Global may use performance rankings, ratings and
commentary reported periodically in national financial publications, included
but not limited to, Money Magazine, Smart Money, Global Finance, EuroMoney,
Financial World, Forbes, Fortune, Business Week, Latin Finance, the Wall Street
Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal Finance,
Barron's, The Financial Times, USA Today, The New York Times, Far Eastern
Economic Review, The Economist and Investors Business Digest. Each Fund may
compare its performance to that of other compilations or indicies of comparable
quality to those listed above and other indicies which may be developed and made
available.
GT Global believes information relating to foreign market performance, market
capitalization and diversification may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a prediction of the performance of the Fund. The performance of the Fund
will differ from the historical performance of the indices represented above.
The performance of indices does not take expenses into account, while the Fund
incurs expenses in its operations which will reduce performance. Moreover, the
Fund is actively managed, i.e. LGT Asset Management as the Fund's investment
manager actively purchases and sells securities in seeking the Fund's investment
objective. This will cause the performance of the Fund to differ from the
indices shown above.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT 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.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT 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 100% of compensation, whichever is less). If your spouse is
not employed, a total of $2,250 may be contributed each year to IRAs set up for
each individual (subject to the maximum of $2,000 per 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.
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.
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 lower annual administration
expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Funds and GT Global will quote certain information
regarding individual countries, regions, world stock exchanges, and economic and
demographic statistics from sources GT Global deems reliable including, but not
limited to, the economic and financial data of such financial organizations 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., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
15) Foreign Direct Investments to developing countries.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management.
18) Political and economic structure of countries: Economist Intelligence Unit.
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
21) Supply, consumption, demand and growth in demand of certain products,
services and industries including, but not limited to, electricity, water,
transportation, construction materials, natural resources, financial
services, health care services and supplies, consumer products and services
and telecommunications equipment and services (sources of such information
may include, but would not be limited to, The World Bank, OECD, IMF,
Bloomberg and Datastream).
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management 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 GT Investment Management Trust Ltd. as one of the first foreign
discretionary investment management for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of LGT Asset Management provide any
assurance that the GT Global Mutual Funds' investment objectives will be
achieved.
THE LGT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the LGT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee which sets broad guidelines for asset
allocation and currency management based on LGT Asset Management's own
macroeconomic forecasts and research from our worldwide offices. The bottom-up
approach utilizes regional teams of individual portfolio managers to implement
the committee's guidelines by selecting local securities that offer strong
growth potential.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1,"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of senior short-term promissory obligations. Prime-1 repayment ability
will often be evidenced by the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protections; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained. Issuers rated Prime-3 have
an acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
STANDARD & POOR'S ("S&P") ratings of commercial paper are graded into four
categories ranging from "A" for the highest quality obligations to "D" for the
lowest. A -- Issues assigned its highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 -- This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (++) sign
designation. A-2 -- Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." A-3 --Issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond because margins of protection may not be as large as in
Aaa
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
securities, fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make the long-term risks appear
somewhat larger than the Aaa securities.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Ba -- These bonds are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
Speculative grade ratings are as follows:
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-' rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have a currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
repay principal. The 'CCC' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'B' or
'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on the filing of a bankruptcy petition if debt service payments are
jeopardized.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of G.T. Latin America Growth Fund at October
31, 1995 and for the period then ended appear on the following pages.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Latin America Growth Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Latin America Growth Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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 four years in the period
then ended and for the period from August 13, 1991 (commencement of operations)
to October 31, 1991. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Latin America Growth Fund as of October 31, 1995, the results of 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 four
years in the period then ended and for the period from August 13, 1991
(commencement of operations) to October 31, 1991, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (17.4%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ............ MEX 1,038,200 $ 13,560,757 4.3
PAPER/PACKAGING
Cemex, S.A. de C.V.: ................................... MEX -- -- 3.7
CEMENT
"B" - ADR{\/} ........................................ -- 984,875 6,155,469 --
"B" .................................................. -- 1,825,000 5,639,045 --
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ..... CHLE 176,300 7,647,013 2.4
CHEMICALS
Dixie Toga{::} -/- ..................................... BRZL 6,938,646 6,494,832 2.0
PAPER/PACKAGING
La Cementos Nacional, C.A. - 144A GDR{.} -/- {\/} ..... ECDR 18,176 3,635,200 1.1
CEMENT
Companhia Siderurgica Nacional S.A.: ................... BRZL -- -- 1.2
METALS - STEEL
Common-/- ............................................ -- 112,958,000 2,420,109 --
ADR-/- {\/} .......................................... -- 57,500 1,207,500 --
White Martins S.A. ..................................... BRZL 2,319,570,000 2,243,578 0.7
CHEMICALS
Empaques Ponderosa, S.A. de C.V. "B"-/- ................ MEX 770,000 1,622,191 0.5
PAPER/PACKAGING
Cemento Argos S.A.-/- .................................. COL 260,248 1,565,951 0.5
CEMENT
Venezolana de Prerreducidos Caroni C.A. (Venprecar) -
GDR{\/} ............................................... VENZ 270,500 1,420,125 0.4
METALS - STEEL
Venezolana de Cementos, S.A.C.A.: ...................... VENZ -- -- 0.4
CEMENT
"A" .................................................. -- 1,094,080 1,213,730 --
"B" .................................................. -- 7 7 --
Venezolana de Pulpa Y Papel "A" ........................ VENZ 916,738 455,293 0.1
FOREST PRODUCTS
Melpaper S.A. Preferred-/- ............................. BRZL 1,950,000 294,072 0.1
PAPER/PACKAGING
Papelera Inversora S.A.-/- ............................. ARG 3,616 8,136 --
PAPER/PACKAGING
------------
55,583,008
------------
Energy (17.1%)
Centrais Eletricas Brasileiras S.A. (Eletrobras): ...... BRZL -- -- 3.3
ELECTRICAL & GAS UTILITIES
"B" Preferred-/- ..................................... -- 27,400,000 7,808,216 --
Common-/- ............................................ -- 9,500,000 2,697,348 --
Empresa Nacional de Electricidad S.A. - ADR{\/} ........ CHLE 474,000 10,191,000 3.2
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ............................... CHLE 424,200 10,180,800 3.2
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{::} {\/} ....... BOL 247,100 7,196,788 2.3
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ........................ VENZ 6,589,477 4,377,041 1.4
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
MetroGas S.A. - ADR{\/} ................................ ARG 400,000 $ 3,400,000 1.1
OIL
Petrobras Distribuidora S.A. Preferred-/- ............. BRZL 105,030,000 3,309,838 1.0
ENERGY SOURCE
Companhia Energetica de Minas Gerais (Cemig)
Preferred ............................................. BRZL 146,792,050 3,144,999 1.0
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A. - ADR-/- {\/} ........... ARG 110,857 1,884,569 0.6
ELECTRICAL & GAS UTILITIES
------------
54,190,599
------------
Finance (15.5%)
Banco Bradesco S.A. Preferred .......................... BRZL 1,463,332,287 13,392,953 4.2
BANKS-MONEY CENTER
Banco Itau S.A. Preferred .............................. BRZL 37,330,000 11,065,055 3.5
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR-/- {\/} ........................................... CHLE 279,300 6,842,850 2.2
OTHER FINANCIAL
Uniao Bancos Brasileiras "A" Preferred ................. BRZL 170,170,000 5,964,357 1.9
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B" .... MEX 2,565,000 4,395,084 1.4
BANKS-MONEY CENTER
Seguros Comercial America S.A. "B"-/- .................. MEX 11,416,000 2,725,730 0.9
INSURANCE - MULTI-LINE
Grupo Financiero BanCrecer, S.A. de C.V. "B"-/- ........ MEX 6,164,599 2,337,699 0.7
BANKS-MONEY CENTER
Grupo Financiero Bancomer, S.A. de C.V. ................ MEX -- -- 0.7
BANKS-MONEY CENTER
"B"-/- ............................................... -- 7,167,000 1,852,146 --
"L"-/- ............................................... -- 817,296 189,401 --
Banco Ganadero S.A. - ADR-/- {\/} ...................... COL 7,100 69,225 --
BANKS-MONEY CENTER
------------
48,834,500
------------
Services (13.0%)
Santa Isabel S.A. - ADR{\/} ............................ CHLE 449,800 10,176,725 3.2
RETAILERS-FOOD
Telecomunicacoes Brasileiras S.A. (Telebras)
Preferred ............................................. BRZL 210,000,000 8,515,757 2.7
TELEPHONE NETWORKS
CPT Telefonica De Peru "B" ............................ PERU 4,288,446 7,668,082 2.4
TELEPHONE NETWORKS
Lojas Americanas S.A. Preferred-/- .................... BRZL 256,735,469 6,141,358 1.9
RETAILERS-OTHER
Telecom Argentina S.A. - ADR{\/} ....................... ARG 87,000 3,338,625 1.1
TELEPHONE NETWORKS
Telefonica de Argentina S.A. - ADR{\/} ................. ARG 125,000 2,593,750 0.8
TELEPHONE NETWORKS
Gran Cadena de Almacenes Colombianos S.A.: ............. COL -- -- 0.8
RETAILERS-OTHER
144A ADR{.} {\/} .................................... -- 151,600 1,932,900 --
Common ............................................... -- 544,164 611,206 --
Carulla y Compania S.A. - 144A ADR{.} -/- {\/} ......... COL 54,000 405,000 0.1
RETAILERS-FOOD
------------
41,383,403
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Multi Industry/Miscellaneous (10.1%)
Grupo Carso, S.A. de C.V. "A1"-/- ...................... MEX 2,140,000 $ 11,210,955 3.5
CONGLOMERATE
San Luis "CPO"-/- ...................................... MEX 1,698,000 7,989,185 2.5
CONGLOMERATE
Alfa, S.A. de C.V. ..................................... MEX 599,500 6,820,154 2.1
CONGLOMERATE
Grupo Sidek, S.A. de C.V.: ............................. MEX -- -- 2.0
CONGLOMERATE
ADR-/- {\/} .......................................... -- 1,262,900 3,315,113 --
"B"-/- ............................................... -- 6,005,000 2,850,688 --
"A"-/- ............................................... -- 980,000 440,449 --
------------
32,626,544
------------
Metals - Non-Ferrous (8.7%)
Companhia Vale do Rio Doce Preferred .................. BRZL 66,900,000 10,784,711 3.4
Grupo Mexico S.A. "B" .................................. MEX 1,860,924 7,775,630 2.5
Cia de Minas Buenaventura "C" ......................... PERU 1,011,948 5,562,363 1.8
Paranapanema S.A. Min., Ind. E Construacao Preferred-/-
...................................................... BRZL 265,700,000 3,056,310 1.0
------------
27,179,014
------------
Consumer Non-Durables (8.3%)
Companhia Cervejaria Brahma Preferred .................. BRZL 25,640,000 9,786,667 3.1
BEVERAGES - ALCOHOLIC
Embotelladora Andina S.A. - ADR{\/} .................... CHLE 238,100 7,916,825 2.5
BEVERAGES - NON ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred .............. BRZL 9,921,300 3,095,569 1.0
TEXTILES & APPAREL
Grupo Modelo S.A. "C" .................................. MEX 744,000 2,831,798 0.9
BEVERAGES - ALCOHOLIC
Compania Nacional de Chocolates S.A.-/- ................ COL 207,700 1,655,934 0.5
FOOD
Jugos Del Valle S.A. "B"-/- ............................ MEX 550,000 956,320 0.3
BEVERAGES - NON ALCOHOLIC
------------
26,243,113
------------
Capital Goods (1.9%)
Bufete Industrial, S.A. de C.V. - ADR-/- {\/} .......... MEX 454,900 6,084,288 1.9
CONSTRUCTION
------------ -----
TOTAL EQUITY INVESTMENTS (cost $317,060,467) ............ 292,124,469 92.0
------------ -----
<CAPTION>
No. of Market % of Net
Rights (0.0%) Country Rights Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Companhia Energetica de Minas Gerais (CEMIG) Rights,
expire 11/24/95 (cost $0)-/- .......................... BRZL 7,009,278 -- --
------------ -----
ELECTRICAL & GAS UTILITIES
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (1.8%)
Mexico (1.8%)
Mexican Tesobonos, effective yield 15.53%, due
11/30/95 (cost $5,630,523) .......................... USD 5,700,000 5,630,523 1.8
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80%, collateralized by $36,945,000 U.S. Treasury
Strips, due 2/15/02 (market value of collateral is
$25,568,464). (cost $24,760,989) ..................... $ 24,760,989 7.8
------------ -----
TOTAL INVESTMENTS (cost $347,451,979) .................... 322,515,981 101.6
Other Assets and Liabilities ............................. (5,158,417) (1.6)
------------ -----
NET ASSETS ............................................... $317,357,564 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $317,357,564.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{::} See Note 7 of Notes to Financial Statements.
{.} 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.
* For Federal income tax purposes, cost is $353,457,428 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 25,131,541
Unrealized depreciation: (56,072,988)
-------------
Net unrealized appreciation: $ (30,941,447)
-------------
-------------
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) ................. 3.6 3.6
Bolivia (BOL/BOL) .................... 2.3 2.3
Brazil (BRZL/BRL) .................... 32.0 32.0
Chile (CHLE/CLP) ..................... 16.7 16.7
Colombia (COL/COP) ................... 1.9 1.9
Ecuador (ECDR/ECS) .................. 1.1 1.1
Mexico (MEX/MXN) ..................... 27.9 1.8 29.7
Peru (PERU/PES) ...................... 4.2 4.2
United States (US/USD) ............... 0.0 6.2 6.2
Venezuela (VENZ/VEB) ................. 2.3 2.3
------ --- -----
Total ............................... 92.0 8.0 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $317,357,564.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $347,451,979)
(Note 1).................................................. $322,515,981
U.S. currency.............................. $ 422 --
Foreign currencies (cost $11,843,274)...... 11,321,619 11,322,041
-----------
Receivable for securities sold............................. 7,089,391
Receivable for Fund shares sold............................ 2,023,413
Dividends receivable....................................... 933,861
Miscellaneous receivable................................... 240,317
Unamortized organizational costs (Note 1).................. 16,576
------------
Total assets............................................. 344,141,580
------------
Liabilities:
Payable for Fund shares repurchased........................ 25,098,291
Payable for securities purchased........................... 879,083
Payable for investment management and administration fees
(Note 2).................................................. 286,790
Payable for service and distribution expenses (Note 2)..... 208,970
Payable for transfer agent fees (Note 2)................... 128,073
Payable for printing and postage expenses.................. 78,359
Payable for professional fees.............................. 33,261
Payable for custodian fees................................. 26,932
Payable for registration and filing fees................... 22,059
Payable for fund accounting fees (Note 2).................. 7,416
Payable for Directors' fees and expenses (Note 2).......... 3,354
Other accrued expenses..................................... 11,428
------------
Total liabilities........................................ 26,784,016
------------
Net assets................................................... $317,357,564
------------
------------
Class A:
Net asset value and redemption price per share ($182,461,796
DIVIDED BY 11,864,279 shares outstanding)................... $ 15.38
------------
------------
Maximum offering price per share (100/95.25 of $15.38) *..... $ 16.15
------------
------------
Class B:+
Net asset value and offering price per share ($134,527,018
DIVIDED BY 8,842,965 shares outstanding).................... $ 15.21
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share ($368,750 DIVIDED BY 23,940 shares
outstanding)................................................ $ 15.40
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................... $440,895,860
Undistributed net investment income........................ 1,356,776
Accumulated net realized loss on investments and foreign
currency transactions..................................... (99,318,624)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies......................... (640,450)
Net unrealized depreciation of investments................. (24,935,998)
------------
Total -- representing net assets applicable to capital shares
outstanding................................................. $317,357,564
------------
------------
<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 47
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$514,492).................................................. $ 7,388,772
Interest income............................................. 4,558,049
-------------
Total investment income................................... 11,946,821
-------------
Expenses:
Investment management and administration fees (Note 2)...... 3,913,429
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,189,722
Class B.................................. 1,632,783 2,822,505
------------
Transfer agent fees (Note 2)................................ 1,713,500
Custodian fees.............................................. 299,977
Printing and postage expenses............................... 183,720
Registration and filing fees................................ 147,250
Fund accounting fees (Note 2)............................... 101,476
Audit fees.................................................. 39,700
Amortization of organization costs (Note 1)................. 35,559
Legal fees.................................................. 30,150
Directors' fees and expenses (Note 2)....................... 18,450
Insurance expenses.......................................... 6,878
Other expenses.............................................. 4,496
-------------
Total expenses before reductions.......................... 9,317,090
-------------
Expense reductions (Note 6)............................. (21,159)
-------------
Total net expenses........................................ 9,295,931
-------------
Net investment income......................................... 2,650,890
-------------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... (98,358,686)
Net realized loss on foreign currency
transactions.............................. (513,916)
------------
Net realized loss during the year......................... (98,872,602)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (795,171)
Net change in unrealized depreciation of
investments............................... (97,151,861)
------------
Net unrealized depreciation during the year............... (97,947,032)
-------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (196,819,634)
-------------
Net decrease in net assets resulting from operations.......... $(194,168,744)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)............... $ 2,650,890 $ (1,702,002)
Net realized gain (loss) on investments and
foreign currency transactions............. (98,872,602) 36,455,773
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... (795,171) 624,742
Net change in unrealized appreciation
(depreciation) of investments............. (97,151,861) 42,935,159
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (194,168,744) 78,313,672
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. -- (1,602,016)
From net realized gain on investments...... (19,567,238) (1,208,111)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. -- (278,582)
From net realized gain on investments...... (14,468,347) (226,277)
----------------- -----------------
Total distributions...................... (34,035,585) (3,314,986)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,098,477,187 1,159,589,487
Decrease from capital shares repurchased... (1,101,548,404) (828,810,299)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (3,071,217) 330,779,188
----------------- -----------------
Total increase (decrease) in net assets...... (231,275,546) 405,777,874
Net assets:
Beginning of year.......................... 548,633,110 142,855,236
----------------- -----------------
End of year................................ $ 317,357,564 $ 548,633,110
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------
AUGUST 13, 1991
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
--------------------------------------------------- OCTOBER 31,
1995(A) 1994(A) 1993(A) 1992 1991
---------- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 26.11 $ 19.78 $ 15.59 $ 16.45 $ 14.29
---------- ----------- ----------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... 0.15 (0.08) 0.18 0.25 0.01
Net realized and unrealized gain
(loss) on investments................ (9.28) 6.75 5.21 (0.98) 2.15
---------- ----------- ----------- ---------- -----------------
Net increase (decrease) from
investment operations.............. (9.13) 6.67 5.39 (0.73) 2.16
---------- ----------- ----------- ---------- -----------------
Distributions to shareholders:
From net investment income............ -- (0.19) (0.12) (0.13) --
From net realized gain on
investments.......................... (1.60) (0.15) (1.08) -- --
---------- ----------- ----------- ---------- -----------------
Total distributions................. (1.60) (0.34) (1.20) (0.13) --
---------- ----------- ----------- ---------- -----------------
Net asset value, end of period.......... $ 15.38 $ 26.11 $ 19.78 $ 15.59 $ 16.45
---------- ----------- ----------- ---------- -----------------
---------- ----------- ----------- ---------- -----------------
Total investment return (d)............. (37.16)% 34.10% 37.10% (4.50)% 15.10%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $182,462 $336,960 $129,280 $94,085 $125,038
Ratio of net investment income (loss) to
average net assets..................... 0.86% (0.29)% 1.30%* 1.30%* 1.20%*(c)
Ratio of expenses to average net assets:
With expense reductions (Note 6)...... 2.11% 2.04% 2.40%* 2.40%* 2.40%*(c)
Without expense reductions............ 2.12% --%** --%** --%** --%**
Portfolio turnover rate++++............. 125% 155% 112% 159% none
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02, $0.04 and $0.01 for the years ended
October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively. Without such reimbursements, the
expense ratios would have been 2.49%, 2.62% and 3.42% and the ratios
of net investment income to average net assets would have been 1.25%,
1.07% and 0.15% for the years ended October 31, 1993 and 1992 and for
the period from August 13, 1991 to October 31, 1991, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS B++ CLASS+++
----------------------------------------- -------------
APRIL 1, 1993 JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO TO
------------------------ OCTOBER 31, OCTOBER 31,
1995(A) 1994(A) 1993(A) 1995
---------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 25.94 $ 19.75 $ 16.26 $15.95
---------- ----------- -------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.06 (0.22) (0.07) 0.09
Net realized and unrealized gain
(loss) on investments................ (9.19) 6.74 3.56 (0.64)
---------- ----------- -------------- -------------
Net increase (decrease) from
investment operations.............. (9.13) 6.52 3.49 (0.55)
---------- ----------- -------------- -------------
Distributions to shareholders:
From net investment income............ -- (0.18) -- 0.00
From net realized gain on
investments.......................... (1.60) (0.15) -- 0.00
---------- ----------- -------------- -------------
Total distributions................. (1.60) (0.33) -- 0.00
---------- ----------- -------------- -------------
Net asset value, end of period.......... $ 15.21 $ 25.94 $ 19.75 $15.40
---------- ----------- -------------- -------------
---------- ----------- -------------- -------------
Total investment return (d)............. (37.42)% 33.33% 21.50%(b) (3.45)%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $134,527 $211,673 $13,576 $ 369
Ratio of net investment income (loss) to
average net assets..................... 0.36% (0.79)% (0.70)%(c) 1.36%(c)
Ratio of expenses to average net assets:
With expense reductions (Note 6)...... 2.61% 2.54% 2.90%(c) 1.61%(c)
Without expense reductions............ 2.62% --%** --%** 1.62%(c)
Portfolio turnover rate++++............. 125% 155% 112% 125%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02, $0.04 and $0.01 for the years ended
October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively. Without such reimbursements, the
expense ratios would have been 2.49%, 2.62% and 3.42% and the ratios
of net investment income to average net assets would have been 1.25%,
1.07% and 0.15% for the years ended October 31, 1993 and 1992 and for
the period from August 13, 1991 to October 31, 1991, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Latin America Growth Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records 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 Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
between the trade and settlement dates on securities transactions, and the
differences between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than investments
in securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities." 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
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the fund hold the underlying security
and, for a put, requires the Fund to maintain in a segregated account cash, U.S.
government securities, or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the stock or bond market and to fluctuations in currency values
or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed. The potential risk to the Fund is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Fund may use futures contracts to manage its
exposure to the stock or bond 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. Interest income is recorded on the
accrual basis. Where a high level of uncertainty exists as to its collection,
income is recorded net of all withholding tax with any rebate recorded when
received. The Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous prices.
(H) 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
$93,313,175 which expires in 2003.
(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 initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $177,793. These
expenses are being amortized on a straight line basis over a five-year period.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) 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.
(M) 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.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% of the first $500 million of average daily net assets of the
Fund; 0.95% of the next $500 million; 0.925% of the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, is the Fund's distributor. The Fund offers Class A, Class B and Advisor
Class shares for purchase.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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, 1995, G.T. Global retained
$291,788 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $60,973 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $699,275. 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%, 2.90%, and 1.90% of the average
net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $24,138 to G.T. Capital.
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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$442,862,676 and $469,450,615. There were no purchases or sales of U.S.
government obligations for the year ended October 31, 1995.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
4. CAPITAL SHARES
At October 31, 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
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- ---------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 52,467,821 $ 904,752,193 33,720,715 $ 806,747,697
Shares issued in connection with reinvestment of
distributions.............................................. 673,780 16,139,240 111,943 2,416,821
----------- ------------- ------------ -------------
53,141,601 920,891,433 33,832,658 809,164,518
Shares repurchased........................................... (54,183,599) (943,221,637) (27,463,633) (659,239,270)
----------- ------------- ------------ -------------
Net increase (decrease)...................................... (1,041,998) $ (22,330,204) 6,369,025 $ 149,925,248
----------- ------------- ------------ -------------
----------- ------------- ------------ -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- ---------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 9,341,199 $ 166,467,703 14,675,635 $ 350,025,309
Shares issued in connection with reinvestment of
distributions.............................................. 439,250 10,440,947 18,533 399,660
----------- ------------- ------------ -------------
9,780,449 176,908,650 14,694,168 350,424,969
Shares repurchased........................................... (9,097,593) (158,042,884) (7,221,595) (169,571,029)
----------- ------------- ------------ -------------
Net increase................................................. 682,856 $ 18,865,766 7,472,573 $ 180,853,940
----------- ------------- ------------ -------------
----------- ------------- ------------ -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 41,561 $ 677,104
Shares repurchased........................................... (17,621) (283,883)
----------- -------------
Net increase................................................. 23,940 $ 393,221
----------- -------------
----------- -------------
</TABLE>
5. WRITTEN OPTIONS:
The Fund's written options contract activity for the year ended October 31,
1995, was as follows:
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
--------- --------
<S> <C> <C>
Options outstanding at October 31, 1994.................................... 300 $66,750
Options written............................................................ 0 0
Options cancelled in closing purchase transactions......................... 0 0
Options expired prior to exercise.......................................... (300) (66,750 )
Options exercised.......................................................... 0 0
--- --------
Options outstanding at October 31, 1995.................................... 0 $ 0
--- --------
--- --------
</TABLE>
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $21,159 under these arrangements.
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $13,691,620,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- -------------------------------------------------------------------------------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia Electrica......................................... $7,532,161 $ -- $ -- $ 46,949
Dixie Toga...................................................................... 3,646,979 1,209,733 479,746 --
</TABLE>
8. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
The Fund's name, G.T. Latin America Growth Fund, will become "GT Global Latin
America Growth Fund."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$24,119,757 as capital gain dividends for the fiscal year ended October 31,
1995.
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.378 per share (representing an approximate total of
$7,571,282). The total amount of dividend & capital gain taxes paid by the Fund
to such countries was approximately $0.028 per share (representing an
approximate total of $554,423).
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICAN SMALL CAP FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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., GT GLOBAL
LATIN AMERICA FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
LATSA602MC
<PAGE>
GT GLOBAL EMERGING
MARKETS FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
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GT Global Emerging Markets Fund ("Fund") is a diversified mutual fund organized
as a separate series of G.T. Investment Funds, Inc. ("Company"), a registered
open-end management investment company. This Statement of Additional Information
relating to the Class A and Class B shares of the Fund, which is not a
prospectus, supplements and should be read in conjunction with the Fund's
current Class A and Class B Prospectus dated February 29, 1996. A copy of the
Fund's Prospectus is available without charge by writing to the above address or
by calling the Fund at the toll-free telephone number listed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or "Transfer Agent").
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TABLE OF CONTENTS
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Page No.
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<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 17
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 21
Management............................................................................................................... 23
Valuation of Fund Shares................................................................................................. 25
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 32
Description of Debt Ratings.............................................................................................. 38
Financial Statements..................................................................................................... 40
</TABLE>
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Statement of Additional Information Page 1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
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INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of capital. The Fund
seeks this objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies in emerging markets. The Fund
does not consider the following countries to be emerging markets: Australia,
Austria, Belgium, Canada, Denmark, England, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
and United States. The Fund normally may invest up to 35% of its assets in a
combination of (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not included in the list of emerging markets set forth in the Fund's
current Prospectus, if investing therein becomes feasible and desirable
subsequent to the date of the Fund's current Prospectus; and (iv) cash and money
market instruments.
In determining what countries constitute emerging markets, LGT Asset Management
will consider, among other things, data, analysis, and classification of
countries published or disseminated by the International Bank for Reconstruction
and Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF EQUITY INVESTMENTS
LGT Asset Management is the investment manager of the Fund. In determining the
appropriate distribution of investments among various countries and geographic
regions for the Fund, LGT Asset Management ordinarily considers the following
factors: prospects for relative economic growth between the different countries
in which the Fund may invest; expected levels of inflation; government policies
influencing business conditions; the outlook for currency relationships; and the
range of the individual investment opportunities available to international
investors.
In analyzing companies in emerging markets for investment by the Fund, LGT Asset
Management ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The
Securities and Exchange Commission ("SEC") has proposed a rule which, if
adopted, may permit the Fund to invest in certain of these securities subject to
certain restrictions. The proposed rule excepts from the prohibition of the 1940
Act any acquisition by an investment company of securities in related companies
provided that certain percentage limitations are adhered to. The Fund has
obtained an exemption from the SEC to permit the Fund to invest in a manner that
is consistent with the SEC's proposed rule.
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities of
closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide, in part, that the Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in the aggregate more than 3 percent of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5 percent of its total assets invested in the investment company or
more than 10 percent of its total assets invested in the aggregate in all such
investment companies. Investment in such investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such funds unless, in the
judgment of LGT Asset Management, the potential benefits of such investments
justify the payment of any applicable premiums. The yield of such securities
will be reduced by operating expenses of such companies including payments to
the investment managers of those investment companies. At such time as direct
investment in these countries is allowed, the Fund anticipates investing
directly in these markets.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, the Fund may invest in
yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"),
and may invest in dollar-denominated bonds sold in the United States by non-U.S.
issuers ("Yankee bonds"). As compared with bonds issued in their countries of
domicile, such bond issues normally carry a higher interest rate but are less
actively traded. It is the policy of the Fund to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield. These bonds would be issued by governments which
are members of the Organization for Economic Cooperation and Development or have
AAA ratings.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs typically are issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally, ADRs and ADSs in
registered form are designed for use in United States securities markets and
EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
listed on the American or New York Stock Exchange. Warrants or rights acquired
by the Fund in units or attached to securities will be deemed to be without
value for purpose of this restriction. These limits are not fundamental policies
of the Fund and may be changed by vote of the Company's Board of Directors
without shareholder approval.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by LGT Asset
Management to present minimal credit risks in accordance with guidelines
approved by the Company's Board of Trustees. LGT Asset Management reviews and
monitors the creditworthiness of such institutions under the Board's general
supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, I.E.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from purchasing securities during times
when outstanding borrowings represent more than 5% of its assets. Nevertheless,
this policy may be changed in the future by vote of a majority of the Company's
Board of Directors. In the event that the Fund employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Fund's earnings or net asset value will increase faster than otherwise would
be the case; conversely, if such income and gains fail to exceed such costs, the
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase, the security in the future at an agreed upon price,
which includes an interest component. The Fund
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
also may engage in "roll" borrowing transactions which involve the Fund's sale
of Government National Mortgage Association certificates or other securities
together with a commitment (for which the Fund may receive a fee) to purchase
similar, but not identical, securities at a future date. The Fund will maintain
in a segregated account with a custodian cash, U.S. government securities or
other liquid, high grade debt securities in an amount sufficient to cover its
obligations under "roll" transactions and reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund has a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are being lent, but it will call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Loans only will be made to
firms deemed by LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund also will be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
Statement of Additional Information Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 LGT Asset
Management'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 LGT Asset Management 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 the Fund entered into a
short hedge because LGT Asset Management projected a decline in the price of
a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of LGT Asset Management are not expected to make any major price moves
in the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the
Statement of Additional Information Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time 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 identical substantially to that of call options.
The Fund generally would write put options in circumstances where LGT Asset
Management wishes to purchase the underlying security or currency for the Fund's
portfolio at a price lower than the current market price of the security or
currency. In such event, the Fund would write a put option at an exercise price
that, reduced by the premium received on the option, reflects the lower price it
is willing to pay. Since the Fund would also receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to sell the security or currency at more than its market value.
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PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when LGT Asset
Management 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL EMERGING MARKETS FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL EMERGING MARKETS FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September 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
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GT GLOBAL EMERGING MARKETS FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL EMERGING MARKETS FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
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GT GLOBAL EMERGING MARKETS FUND
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which LGT Asset Management believes will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Statement of Additional Information Page 13
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GT GLOBAL EMERGING MARKETS FUND
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash, U.S. government securities or other liquid,
high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property. Investing in the
securities of companies in emerging markets, including the markets of Latin
America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may
entail special risks relating to the potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility of currencies
into U.S. dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, the Fund
could lose its entire investment in any such country.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars, and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
Statement of Additional Information Page 14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1993
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to LGT Asset Management, in accordance
with procedures approved by the Company's Board of Directors. LGT Asset
Management takes into account a number of factors in reaching liquidity
decisions, including, but not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security: (iii) the
number of dealers who have undertaken to make a market in the security; (iv) the
number of other potential purchasers; and (v) the nature of the security and how
trading is affected (E.G., the time needed to sell the security, how offers are
solicited and the mechanics of
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
transfer). LGT Asset Management monitors the liquidity of securities in the
Fund's portfolio and periodically reports on such decisions to the Board of
Directors.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or may limit the investment by foreign persons to only a specific class
of securities of a company that may have less advantageous terms than securities
of the company available for purchase by nationals. Moreover, the national
policies of certain countries may restrict investment opportunities in issuers
or industries deemed sensitive to national interests. In addition, some
countries require governmental approval for the repatriation of investment
income, capital or the proceeds of securities sales by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose restrictions on foreign capital remittances
abroad. The Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, LGT Asset Management will take appropriate
steps to evaluate the proposed investment, which may include on-site inspection
of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure information.
CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries, and the
U.S., and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
governmental supervision and regulation than in the United States, and foreign
securities transactions are usually subject to fixed commissions, which are
generally higher than negotiated commissions on U.S. transactions. In addition,
foreign securities transactions may be subject to difficulties associated with
the settlement of such transactions. Delays in settlement could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security due to settlement
problems either could result in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. LGT
Asset Management will consider such difficulties when determining the allocation
of the Fund's assets, although LGT Asset Management does not believe that such
difficulties will have a material adverse effect on the Fund's portfolio trading
activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
For purposes of concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Directors of the Fund, its
investment adviser, or distributor, each own beneficially more than 1/2 of
1% of the securities of such issuer and together own beneficially more than
5% of the securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation; or
(7) Invest more than 10% of its total assets in securities that are
restricted as to resale without registration under the 1933 Act.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Fund's portfolio transactions
and the selection of brokers and dealers who execute such transactions on behalf
of the Fund. In executing portfolio transactions, LGT Asset Management seeks the
best net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
Although LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, LGT Asset Management may select
brokers to execute the Fund's portfolio transactions on the basis of the
research and brokerage services they provide to LGT Asset Management for its use
in managing the Fund and its other advisory accounts. Such services may include
furnishing analyses, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such brokers are in addition to,
and not in lieu of, the services required to be performed by LGT Asset
Management under the Management Contract (defined below). A commission paid to
such brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that LGT Asset Management
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of LGT Asset
Management to the Fund and its other clients and that the total commissions paid
by the Fund will be reasonable in relation to the benefits received by the Fund
over the long term. Research services may also be received from dealers who
execute Fund transactions.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Fund toward payment of the Fund's expenses, such
as transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
LGT Asset Management are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, LGT Asset Management may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which LGT
Asset Management serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and
broker/dealers than in the United States. Foreign security settlements may in
some instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States,
Statement of Additional Information Page 19
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GT GLOBAL EMERGING MARKETS FUND
will be subject to negotiated commission rates. The foreign and domestic debt
securities and money market instruments in which the Fund may invest are
generally traded in the over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are affiliates of Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations. For the fiscal years ended October 31, 1993, 1994
and 1995, the Fund paid aggregate brokerage commissions of $2,361,620,
$1,747,307 and $3,307,402, respectively.
PORTFOLIO TRADING AND TURNOVER
The portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the Fund's average month-end portfolio
value, excluding short-term investments. For purposes of this calculation,
portfolio securities exclude purchases and sales of debt securities having a
maturity at the date of purchase of one year or less. The Fund engages in
portfolio trading when LGT Asset Management has concluded that the sale of a
security owned by the Fund and/or the purchase of another security of better
value can enhance principal and/or increase income. A security may be sold to
avoid any prospective decline in market value, or a security may be purchased in
anticipation of a market rise. Consistent with the Fund's investment objective,
a security also may be sold and a comparable security purchased coincidentally
in order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities.
Although the Fund generally does not intend to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever LGT Asset Management
believes it is appropriate to do so, without regard to the length of time a
particular security may have been held. Portfolio turnover rate will not be a
limiting factor when management deems portfolio changes appropriate. Higher
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly, and may result in
realization of net capital gains that are taxable when distributed to the Fund's
shareholders. For the fiscal year ended October 31, 1995 and 1994, the Fund's
portfolio turnover rates were 114% and 100%, respectively.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust, since 1995; Director and President of LGT Asset Management Holdings, Inc. ("LGT
50 California Street Asset Management Holdings") since 1988; Director and President of LGT Asset Management
San Francisco, CA 94111 since 1989; Director of GT Global since 1987 and President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and President of G.T.
Insurance from 1992 to 1995. Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Ms. 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989; Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management
Vice President and Secretary Holdings, LGT Asset Management, GT Global, G.T. Insurance and GT
50 California Street Services since February 1996. Senior Vice President, Secretary and
San Francisco, CA 94111 General Counsel of LGT Asset Management Holdings, LGT Asset Management,
GT Global, GT Services and G.T. Insurance from May 1994 to February
1996. Mr. Lee was the Senior Vice President, General Counsel and
Secretary of Strong/Corneliuson Management, Inc. and Secretary of each
of the Strong Funds from October 1991 through May 1994. For more than
five years prior to October 1991, he was a shareholder in the law firm
of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995, Senior Vice
Vice President and President - Finance and Administration of GT Global, GT Services and
Chief Financial Officer G.T. Insurance. Senior Vice President -- Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President - Finance of GT Insurance from 1992 to 1994; and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President -- Mutual Fund Accounting of LGT Asset Management since
Vice President and Principal 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Accounting Officer from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of G.T. Insurance since 1992 and Assistant General
San Francisco, CA 94111 Counsel of LGT Asset Management Holdings, LGT Asset Management, GT
Global and GT Services since 1991. From 1989 to 1991, Mr. Guarino was an
attorney at The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. From 1993 to
San Francisco, CA 94111 1994, Mr. Thelander was an associate at Kirkpatrick & Lockhart LLP (a
law firm). Prior thereto, he was an attorney with the U.S. Securities
and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors of the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee and
officer of G.T. Greater Europe Fund, Global High Income Portfolio, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series and Global
Investment Portfolio, which also are registered investment companies managed by
LGT Asset Management. Each Director and Officer serves in total as a Director
and/or Trustee and Officer, respectively, of 10 registered investment companies
with 40 series managed or administered by LGT Asset Management. The Company pays
each Director who is not a director, officer or employee of LGT Asset Management
or any affiliated company $5,000 per annum, plus $300 per Fund for each meeting
of the Board attended, and reimburses travel and other expenses incurred in
connection with attendance at such meetings. Other Directors and officers
receive no compensation or expense reimbursement from the Company. For the
fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Ms. Quigley, who are not directors, officers or employees of LGT Asset
Management or any affiliated company, received total compensation of $36,705.30,
$34,230.22, $36,755.58 and $33,706.85, respectively, from the Company for their
services as Directors. For the year ended October 31, 1995, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley received total compensation of $92,176.78,
$87,868.84, $92,280.90 and $86,957.55, respectively, from the 40 GT Global
Mutual Funds for which he or she serves as a Director or Trustee. Fees and
expenses disbursed to the Directors contained no accrued or payable pension, or
retirement benefits. As of the date of this Statement of Additional Information,
the officers and Directors and their families as a group owned in the aggregate
beneficially or of record less than 1% of the outstanding shares of the Fund or
of all the Company's funds in the aggregate.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
LGT Asset Management serves as the Fund's investment manager and administrator
under an Investment Management and Administration Contract ("Management
Contract") between the Company and LGT Asset Management. As investment manager
and administrator, LGT Asset Management makes all investment decisions for the
Fund and administers the Fund's affairs. Among other things, LGT Asset
Management furnishes the services and pays the compensation and travel expenses
of persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company and the Fund, and provides suitable office space,
necessary small office equipment and utilities. For these services, the Fund
pays LGT Asset Management investment management and administration fees, based
on the Fund's average daily net assets, computed daily and paid monthly at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million and .90% on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
LGT Asset Management 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, LGT Asset Management has agreed to reimburse the
Fund if the Fund's annual ordinary expenses exceed the most stringent expense
limitations prescribed by any state in which the Fund's shares are offered for
sale. Currently, the most restrictive applicable limitation provides that the
Fund's expenses may not exceed an annual rate of 2 1/2% of the first $30 million
of average net assets, 2% of the next $70 million of average net assets and
1 1/2% of assets in excess of that amount. Expenses which are not subject to
this limitation are interest, taxes, the amortization of organizational
expenses, payments of distribution fees, in part, certain expenses attributable
to investing outside the U.S. and extraordinary expenses. LGT Asset Management
and GT Global have undertaken to limit the Fund's Class A share and Class B
share expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary items) to the maximum annual level of 2.40% and 2.90% of the
average daily net assets of the Class A and Class B shares of the Fund,
respectively. For the fiscal years ended October 31, 1993, 1994 and 1995, the
Fund paid investment management and administration fees to LGT Asset Management
in the amounts of $1,161,673, $4,702,869 and $5,410,744, respectively.
Certain emerging market countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Class A and Class B shares are offered through the Fund's principal
underwriter and distributor, GT Global, on a "best efforts" basis pursuant to
separate Distribution Contracts between the Company and GT Global. As described
in the Prospectus, the Company has adopted separate Distribution Plans with
respect to each Class of shares of the Fund 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 Fund under the Plans, as described in the
Prospectus, may not be increased without the approval of the majority of the
outstanding voting securities of the affected class. All expenses for which GT
Global is reimbursed under the Class A Plan will have been incurred within one
year of such reimbursement. The Fund makes no payments under the Plans to any
party other than GT Global, which is the distributor (principal underwriter) of
the Fund's
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
shares. The Fund's Class B Plan took effect in April 1, 1993. The following
table discloses payments made by the Fund to GT Global under the two plans of
distribution during the Fund's last two fiscal years:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1995................................................................. $ 1,518,742 $ 2,519,288
Year ended October 31, 1994................................................................. $ 1,530,305 $ 1,762,845
</TABLE>
In approving the Plans, the Directors determined that the continuation of each
Plan was in the best interests of the Fund and its shareholders. Agreements
related to the Plans must also be approved by such vote of the Directors and
Qualified Directors as described above. The Fund's plan of distribution pursuant
to Rule 12b-1 in effect prior to the issuance of two classes of shares, which
was substantially similar to the current Class A Plan, was approved by LGT Asset
Management, as the initial shareholder of the Fund, on May 11, 1992. The Class B
Plan was approved by LGT Asset Management as initial sole shareholder of the
Class B shares of the Fund on March 31, 1993.
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. If the offering of Fund shares is suspended in the
future, the Directors will consider that fact in connection with their quarterly
review of amounts expended under the Plans and the purposes for which such
expenditures were made and the Directors, including the Qualified Directors,
will consider that fact in connection with their annual review of the Plans.
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the 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 for the fiscal years ended October 31,
1993, 1994 and 1995:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- --------- ----------
<S> <C> <C> <C>
1995............................................................................... $ 1,652,309 $ 230,239 $1,422,070
1994............................................................................... 4,220,962 460,124 3,768,838
1993............................................................................... 1,561,000 161,475 1,399,525
</TABLE>
GT Global receives no compensation or reimbursements relating to its
distribution efforts with respect to Class A Shares other than as described
above. GT Global receives any contingent deferred sales charges payable with
respect to redemption of Class B Shares. For the period April 1, 1993
(commencement of operations) through October 31, 1993, and for the fiscal years
ended October 31, 1994 and 1995, GT Global collected contingent deferred sales
charges in the amount of $2,598, $433,744 and $1,059,193, respectively.
Purchases of Class A shares exceeding $500,000 may be subject to a contingent
deferred sales charge upon redemption. GT Global collected contingent deferred
sales charges in the amount of $56,294 for the fiscal year ended October 31,
1995.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent also is reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationery and office supplies.
LGT Asset Management also serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of all
registered mutual funds advised by LGT Asset Management ("GT Global Mutual
Funds") and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets.
As of October 31, 1995, the Fund paid LGT Asset Management fees of $33,216 for
such accounting services.
EXPENSES OF THE FUND
As described in the Prospectus, the Fund pays all of its own expenses not
assumed by other parties. The allocation of general Company expenses and
expenses shared among the Fund and other funds organized as series of the
Company are allocated on a basis deemed fair and equitable, which may be based
on the relative net assets of the Fund or the nature of the services performed
and relative applicability to the Fund. Expenditures, including costs incurred
in connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
principles applicable to investment companies, are accounted for as capital
items and not as expenses. The ratio of the Fund's expenses to its relative net
assets can be expected to be higher than the expense ratios of funds investing
solely in domestic securities, since the cost of maintaining the custody of
foreign securities and the rate of investment management fees paid by the Fund
generally are higher than the comparable expenses of such other funds. For the
fiscal period May 18, 1992 (commencement of operations) through October 31,
1992, LGT Asset Management reimbursed the Fund for a portion of the Fund's
aggregate operating expenses in the amount of $167,334. For the fiscal year
ended October 31, 1993, LGT Asset Management reimbursed the Fund for the Class A
and Class B aggregate operating expenses in the amounts of $565,445 and $43,668,
respectively.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the end of regular trading on The New York
Stock Exchange, Inc. ("NYSE") (currently at 4:00 p.m. Eastern time, unless
weather, equipment failure or other factors contribute to an earlier closing
time), on each Business Day as open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Funds' portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges, are valued at the last sale price on the exchange, or in the
principal over-the-counter market on which such securities are traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined by
LGT Asset Management to be the primary market. Securities and assets for which
market quotations are not readily available (including restricted securities
which are subject to limitations as to their sale) are valued at fair value as
determined in good faith by or under the direction of the Board of Directors.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of the
business day in New York.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term investments are
amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. 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 LGT Asset Management on that day. When market
quotations for futures and options on futures held by the Fund are readily
available, those positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Fund's net assets is so determined, that value is then divided by the total
number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Securities trading in emerging markets may not take place on all days on which
the NYSE is open. Further, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days on which the NYSE is not open.
Consequently, the calculation of the Fund's net asset values therefore may not
take place contemporaneously with the determination of the prices of securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular trading on
the NYSE will not be reflected in the Fund's net asset value unless LGT Asset
Management, under the supervision of the Company's Board of Directors,
determines that the particular event would materially affect net asset value. As
a result, the Fund's net asset value may be significantly affected by such
trading on days when a shareholder cannot provide or redeem the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment of Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
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 assure 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 or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT 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 GT Global within 20 days after written request, the
appropriate number of escrowed shares will be redeemed and the proceeds paid to
GT Global.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the Fund also may 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 GT Global.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT 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 GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). 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 "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that 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 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
closings, or trading on the NYSE is restricted as directed by the SEC, (2) when
an emergency exists, as defined by the SEC, which make it not reasonably
practicable for the Fund to dispose of its portfolio securities or fairly to
determine the value of its assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. This election is irrevocable so long
as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Fund's Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether investment will be in Class A
shares or Class B shares and send the following documents to the Transfer Agent:
(1) an AIP Application; (2) a Bank Authorization Form; and (3) a voided personal
check from the pertinent bank account. The necessary forms are provided at the
back of the Fund's prospectus. Providing that an investor's bank accepts the
Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of a 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, a stop payment order or the account is closed, the AIP
may be discontinued, and any share purchase made upon deposit of such check may
be cancelled. Furthermore, the shareholder will be liable for any loss incurred
by 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 30 days' written notice or by the participant, at any time,
without penalty, upon written notice to the Fund or the Transfer Agent.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- -- options or Futures (other than those on foreign currencies), or foreign
currencies (or options, Futures or Forward Contracts thereon) that are not
directly related to the Fund's principal business of investing in securities (or
options and Futures with respect to securities) ("Short-Short Limitation"); (3)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that represents income from foreign sources as his
own income from those sources, and (3) either deduct the taxes deemed paid by
him in computing his taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his federal income
tax. The Fund will report to its shareholders shortly after each taxable year
their respective shares of the Fund's income from sources within, and taxes paid
to, foreign countries if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, the
stock or of any gain from disposition of, stock of a PFIC (collectively "PFIC
income"), plus interest thereon, even if the Fund distributed the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
U.S. withholding tax (at a rate of 30% or lower treaty rate). Withholding will
not apply if a dividend paid by the Fund to a foreign shareholder is
"effectively connected with the conduct of a U.S. trade or business," in which
case the reporting and withholding requirements applicable to domestic
shareholders will apply. Distributions of net capital gain are not subject to
withholding, but in the case of a foreign shareholder who is a nonresident alien
individual, those distributions ordinarily will be subject to U.S. income tax at
a rate of 30% (or lower treaty rate) if the individual is physically present in
the United States for more than 182 days during the taxable year and the
distributions are attributable to a fixed place of business maintained by the
individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from foreign currencies (except certain gains that
may be excluded by future regulations), and gain from the disposition of
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all of those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign currency-denominated debt securities and options, Futures and Forward
Contracts and options on foreign currencies ("Section 988" gains or losses).
Each Section 988 gain or loss generally is computed separately and treated as
ordinary income or loss. In the case of overlap between Sections 1256 and 988,
special provisions determine the character and timing of any income, gain or
loss. The Fund attempts to monitor Section 988 transactions to minimize any
adverse tax impact.
The foregoing is a general and abbreviated summary of certain U.S. federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) in Tokyo; LGT
Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd.
located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Company and the Fund as to matters
of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company and/or the Fund at any time, or to grant the use of
such names to any other company.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A and Class B shares of the Fund, as follows: Standardized
Return ("T") is computed by using the value at the end of the period ("EV") of a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the SEC: P(1+T)(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 Fund's Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1995, was as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................. (26.69)%
May 18, 1992 (commencement of operations) to October 31, 1995....................................... 6.31%
</TABLE>
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns for the periods shown,
were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................. (27.04)%
April 1, 1993 (commencement of operations) to October 31, 1995...................................... 8.60%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Fund may quote non-standardized total returns that do not reflect the effect of
sales charges. Non-Standardized Returns may be quoted from the same or different
time periods for which Standardized Returns are quoted. The Fund's
Non-Standardized Returns for its Class A shares, stated as aggregate total
returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- -------------------------------------------------------------------------------------------------- -----------------------
<S> <C>
Fiscal year ended October 31, 1995................................................................ (23.04)%
May 18, 1992 (commencement of operations) to October 31, 1995..................................... 29.70%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED RETURN
PERIOD AGGREGATE TOTAL RETURN
- ------------------------------------------------------------------------------------------------ -------------------------
<S> <C>
Fiscal year ended October 31, 1995.............................................................. (23.37)%
April 1, 1993 (commencement of operations) to October 31, 1995.................................. 26.77%
</TABLE>
The Fund's Non-Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- -------------------
<S> <C>
Fiscal year ended October 31, 1995................................................................... (23.04)%
May 18, 1992 (commencement of operations) to October 31, 1995........................................ 7.82%
</TABLE>
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Fund's Non-Standardized Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fiscal year ended October 31, 1995................................................................... (23.37)%
April 1, 1993 through October 31, 1995............................................................... 9.61%
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO EMERGING EQUITY AND BOND MARKETS
Information relating to foreign market performance, diversification and market
capitalization is based on sources believed to be reliable, but is neither
all-inclusive nor warranted as to accuracy by the Company or LGT Asset
Management. The authors and publishers of such material are not to be considered
as "experts" under the Securities Act of 1933 on account of the inclusion of
such information herein. Stocks chosen by Morgan Stanley Capital International
or the IFC for inclusion in its various international market indicies may not
necessarily constitute a representative cross-section of the particular markets.
GT Global believes that information relating to foreign market performance and
market capitalization may be useful to investors considering whether and to what
extent to diversify their investments through the purchase of mutual funds
investing in securities on a global basis. However, this data is not a
representation of the past performance of the Fund, nor is it a prediction of
such performance. The performance of the Fund will differ from the historical
performance of such indices. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. Moreover, the Fund is actively managed, i.e. LGT Asset Management
as the Fund's investment manager actively purchases and sells securities in
seeking the Fund's investment objective; this will cause the performance of the
Fund to differ from indices.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, 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 Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service or
BBB by Standard and Poor's Corporation, or, in the case of nonrated bonds,
BBB by Fitch Investors Service (excluding Collateralized Mortgage
Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (E.G.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms as applicable, or to specific funds or groups of funds within or
without such peer group. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-month U.S. Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars and 22.5% receive four stars. The ratings are subject to
change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on stock markets in developing countries.
(14) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(15) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(16) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(17) Datastream and Worldscope an on-line database retrieval service for
information including but not limited to international financial and
economic data.
(18) International Financial Statistics, which is produced by the
International Monetary Fund.
(19) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(20) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(21) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's.
(22) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, 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, GT Global may
use performance rankings, ratings and commentary reported periodically in
national financial publications, included but not limited to, Money Magazine,
Smart Money, Global Finance, EuroMoney, Financial World, Forbes, Fortune,
Business Week, Latin Finance, the Wall Street Journal, Emerging Markets Weekly,
Kiplinger's Guide To Personal Finance, Barron's, The Financial Times, USA Today,
The New York Times, Far Eastern Economic Review, The Economist and Investors
Business Digest. Each Fund may compare its performance to that of other
compilations or indices of comparable quality to those listed above and other
indices which may be developed and made available.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and investors should consider the Fund as appropriate for a
portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
assets against the potentially increasing costs of foreign manufactured goods.
Of course, there can be no assurance that there will be any correlation between
global investing and the costs of such foreign goods unless there is a
corresponding change in value of the U.S. dollar to foreign currencies. From
time to time, GT Global may refer to or advertise the names of such companies
although there can be no assurance that any GT Global Mutual Fund may own the
securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Savings, Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global 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.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar,Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans of other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Funds through various retirement accounts and plans
that offer deferral of income taxes on investment earnings and may also enable
you to make pre-tax contributions. Because of their advantages, these retirement
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 100% of compensation, whichever is less). If your spouse is
not employed, a total of $2,250 may be contributed each year to IRAs set up for
each individual (subject to the maximum of $2,000 per 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.
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.
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 lower annual administration
expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit sharing plan, additionally permits the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Funds and GT Global will quote certain information
including but not limited to data regarding: individual countries, regions,
world stock exchanges, and economic and demographic statistics from sources GT
Global deems reliable, including but not limited to, the economic and financial
data of such financial organizations 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., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management, Inc.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE LGT ADVANTAGE
With respect to GT Global Emerging Markets Fund, LGT Asset Management has
developed a unique team approach to its emerging markets money management. LGT's
economists and strategists in Hong Kong determine the geographic allocation of
the Fund's assets according to each country's relative industrial development,
potential for productivity gains, and the likely impact of financial
liberalization. Then, portfolio managers in London, San Francisco, Hong Kong and
Singapore identify the individual securities that they believe have the
strongest long-term growth potential in each emerging market. Generally,
securities in Asia are selected by managers in Hong Kong; San Francisco-based
managers look for opportunities in Latin America; and European securities are
selected by London-based personnel.
For the other funds in the GT Global Mutual Funds, LGT Asset Management has
developed a unique team approach to its global money management which we call
the LGT Advantage. LGT Asset Management's money management style combines the
best of the "top-down" and "bottom-up" investment manager strategies. The
top-down approach is implemented by LGT Asset Management's Investment Policy
Committee which sets broad guidelines for asset allocation and currency
management based on LGT Asset Management's own macroeconomic forecasts and
research from our worldwide offices. The bottom-up approach utilizes regional
teams of individual portfolio managers to implement the committee's guidelines
by selecting local securities that offer strong growth potential.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics: leading market positions
in well-established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issues rated
Prime-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Issuers rated Prime-3 have an acceptable ability for
repayment of senior short-term promissory obligations. The effect of industry
characteristics and market composition may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
STANDARD & POOR'S ("S & P") ratings of commercial paper are graded into four
categories ranging from "A" for the highest quality obligations to "D" for the
lowest. A -- Issues assigned its highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 -- This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (++) sign
designation. A-2 -- Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." A-3 -- issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment grade ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large, or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.
Speculative grade ratings are as follows:
Ba -- These Bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
Speculative grade ratings are as follows:
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied "BBB-" rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Have currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC-" debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on filing of a bankruptcy petition if debt service payments are
jeopardized.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the GT Global Emerging Markets Fund at
October 31, 1995 and for the fiscal year then ended appear on the following
pages.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Emerging Markets Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended and for the period from May 18, 1992 (commencement of operations) to
October 31, 1992. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Emerging Markets Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (30.4%)
HSBC Holdings PLC ......................................... HK 818,000 $ 11,903,073 2.5
BANKS-MONEY CENTER
Siam Commercial Bank PLC - Foreign ........................ THAI 949,600 11,096,280 2.3
BANKS-MONEY CENTER
Hang Seng Bank ............................................ HK 840,000 7,035,130 1.5
BANKS-MONEY CENTER
Land and House Co., Ltd. - Foreign ........................ THAI 383,400 6,186,820 1.3
REAL ESTATE
Commerce Asset Holding Bhd. ............................... MAL 1,244,000 6,169,809 1.3
BANKS-MONEY CENTER
State Bank of India Ltd.: ................................. IND -- -- 1.2
BANKS-REGIONAL
Common-/- ............................................... -- 500,500 3,082,258 --
New-/- .................................................. -- 467,050 2,876,261 --
Uniao Bancos Brasileiras "A" Preferred ................... BRZL 165,720,000 5,808,387 1.2
BANKS-MONEY CENTER
National Finance & Securities Public Co., Ltd. -
Foreign-/- ............................................... THAI 1,233,000 5,635,731 1.2
SECURITIES BROKER
City Developments Ltd. .................................... SING 884,000 5,476,106 1.1
REAL ESTATE
Samsung Securities Co., Ltd.-/- ........................... KOR 114,120 4,817,770 1.0
SECURITIES BROKER
Credit Bank of Athens .................................... GREC 80,000 4,813,457 1.0
BANKS-REGIONAL
Commercial Bank of Korea-/- ............................... KOR 403,350 4,495,842 0.9
BANKS-MONEY CENTER
Siam City Bank Ltd. - Foreign ............................. THAI 3,506,800 4,460,159 0.9
BANKS-REGIONAL
Amalgamated Banks of South Africa-/- ...................... SAFR 929,000 4,394,694 0.9
BANKS-REGIONAL
Malayan Banking Bhd. ...................................... MAL 530,000 4,276,717 0.9
BANKS-MONEY CENTER
Sun Hung Kai Properties Ltd. .............................. HK 505,000 4,033,494 0.8
REAL ESTATE
Banco Bradesco S.A. Preferred ............................. BRZL 437,192,750 4,001,348 0.8
BANKS-MONEY CENTER
Hong Kong Land Holdings Ltd.{\/} .......................... HK 2,080,000 3,744,000 0.8
REAL ESTATE INVESTMENT TRUST
Public Bank Bhd. - Foreign ................................ MAL 1,839,000 3,257,430 0.7
BANKS-MONEY CENTER
Industrial Finance Corporation of Thailand: ............... THAI -- -- 0.6
BANKS-MONEY CENTER
Local .................................................. -- 930,466 3,051,011 --
Foreign-/- .............................................. -- 32,534 106,679 --
Cho Hung Bank ............................................. KOR 211,000 3,049,999 0.6
BANKS-REGIONAL
Bank of Ayudhya Ltd. - Foreign ........................... THAI 503,500 2,901,729 0.6
BANKS-REGIONAL
Komercni Banka ............................................ CZCH 50,000 2,839,931 0.6
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Finance One Co., Ltd. - Foreign ........................... THAI 458,700 $ 2,825,855 0.6
SECURITIES BROKER
Land & General Bhd. ....................................... MAL 1,085,000 2,519,780 0.5
REAL ESTATE
Shin Young Securities Co.-/- .............................. KOR 98,800 2,453,535 0.5
SECURITIES BROKER
Hanshin Securities Co. .................................... KOR 109,700 2,451,797 0.5
SECURITIES BROKER
Housing Development Finance Corp.-/- ...................... IND 30,320 2,427,378 0.5
OTHER FINANCIAL
Daewoo Securities Co.-/- ................................. KOR 63,950 2,155,795 0.5
SECURITIES BROKER
Kookmin Bank-/- .......................................... KOR 101,000 2,144,286 0.4
BANKS-MONEY CENTER
Henderson Land Development Co., Ltd. ...................... HK 311,000 1,862,492 0.4
REAL ESTATE
General Finance & Securities Co., Ltd. - Foreign ......... THAI 397,100 1,767,695 0.4
SECURITIES BROKER
Seoul Bank-/- ............................................ KOR 168,500 1,620,912 0.3
BANKS-REGIONAL
Dhana Siam Finance & Securities Co., Ltd. - Foreign ....... THAI 308,600 1,484,126 0.3
SECURITIES BROKER
Banco Ganadero S.A. - ADR-/- {\/} ......................... COL 150,000 1,462,500 0.3
BANKS-REGIONAL
Banco Itau S.A. Preferred ................................. BRZL 2,970,000 880,343 0.2
BANKS-REGIONAL
Kookmin Bank-/- .......................................... KOR 27,768 589,530 0.1
BANKS-MONEY CENTER
Korea First Bank-/- ...................................... KOR 50,000 486,211 0.1
BANKS-REGIONAL
Banco LatinoAmericano de Exportaciones, S.A.
(Bladex){\/} ............................................. PAN 7,300 304,775 0.1
OTHER FINANCIAL
HDFC Bank Ltd. - Subscription Shares ..................... IND 500 499 --
BANKS-MONEY CENTER
------------
146,951,624
------------
Materials/Basic Industry (17.7%)
SA Iron & Steel Industrial Corp., Ltd. (ISCOR) ............ SAFR 14,797,200 15,014,299 3.1
METALS - STEEL
Cementos de Mexico S.A. "B" ............................... MEX 4,679,125 14,457,971 3.0
CEMENT
Sappi Ltd. ................................................ SAFR 684,900 12,959,852 2.7
FOREST PRODUCTS
Pohang Iron & Steel Co., Ltd. ............................. KOR 98,529 9,863,202 2.1
METALS - STEEL
Barlow Ltd. ............................................... SAFR 518,000 6,676,539 1.4
CEMENT
Companhia Vale do Rio Doce Preferred ...................... BRZL 34,200,000 5,513,261 1.2
METALS - NON-FERROUS
General Mining Union Corp. (Gencor) ....................... SAFR 1,440,400 5,056,114 1.1
METALS - NON-FERROUS
Kloof Gold Mining Co., Ltd. ............................... SAFR 474,800 4,492,143 0.9
GOLD
Indian Petrochemicals - GDR-/- {\/} ....................... IND 296,000 3,330,000 0.7
CHEMICALS
Ashanti Goldfields Co., Ltd. - GDR{\/} ................... SAFR 185,000 3,260,625 0.7
GOLD
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Paranapanema S.A. Min., Ind. E Construacao Preferred-/-.... BRZL 146,600,000 $ 1,686,319 0.4
METALS - NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 57,000 744,522 0.2
PAPER/PACKAGING
Associated Cement Cos., Ltd.-/- ........................... IND 8,460 707,067 0.1
CEMENT
Cementos Norte Pacasmayo S.A.-/- .......................... PERU 163,490 360,183 0.1
CEMENT
Dandot Cement Co. Ltd. .................................... PAK 140,770 98,740 --
CEMENT
Engro Chemicals Pakistan Ltd. ............................. PAK 3,252 12,926 --
CHEMICALS
------------
84,233,763
------------
Energy (10.6%)
Sasol Ltd. ................................................ SAFR 1,159,788 10,018,736 2.1
ENERGY SOURCE
Korea Electric Power Corp.-/- ............................. KOR 207,130 9,252,628 1.9
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{::} {\/} .......... BOL 291,700 8,495,763 1.8
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} .................................. CHLE 227,400 5,457,600 1.1
ELECTRICAL & GAS UTILITIES
Yukong Ltd. ............................................... KOR 129,842 4,887,531 1.0
OIL
C.A. La Electricidad de Caracas .......................... VENZ 5,503,255 3,655,521 0.8
ELECTRICAL & GAS UTILITIES
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 121,600 2,614,400 0.5
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A. - ADR-/- {\/} .............. ARG 100,000 1,700,000 0.4
ELECTRICAL & GAS UTILITIES
China Light & Power Co., Ltd. ............................. HK 230,000 1,225,683 0.3
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp. - ADR New{\/} .................. KOR 43,500 1,071,188 0.2
ELECTRICAL & GAS UTILITIES
Yukong Ltd. - New ........................................ KOR 15,558 568,067 0.1
OIL
Dragon Oil PLC-/- ......................................... UK 25,846,152 510,632 0.1
OIL
Polifin Ltd.-/- .......................................... SAFR 173,900 374,363 0.1
ENERGY SOURCE
Madras Refineries Ltd.-/- ................................. IND 199,500 348,101 0.1
OIL
Pakistan State Oil Co., Ltd. .............................. PAK 28,000 292,964 0.1
OIL
------------
50,473,177
------------
Consumer Non-Durables (10.6%)
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 450,000 12,318,750 2.6
BEVERAGES - NON ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 369,100 12,121,137 2.5
BEVERAGES - ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred ................. BRZL 24,740,000 7,719,189 1.6
TEXTILES & APPAREL
Hellenic Bottling Co. S.A. ................................ GREC 160,055 5,108,505 1.1
BEVERAGES - NON ALCOHOLIC
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Sun Brewing Ltd. - 144A GDR{.} {\/} ...................... TRKY 500,000 $ 4,750,000 1.0
BEVERAGES - ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 8,404,543 3,207,974 0.7
BEVERAGES - ALCOHOLIC
Embotelladora Andina S.A. - ADR{\/} ....................... CHLE 80,000 2,660,000 0.6
BEVERAGES - NON ALCOHOLIC
Dhan Fibres Ltd. ......................................... PAK 6,114,000 1,804,763 0.4
TEXTILES & APPAREL
Mahavir Spinning Mills Ltd.-/- ............................ IND 135,716 529,332 0.1
TEXTILES & APPAREL
Nishat Mills Ltd. ........................................ PAK 45,712 41,750 --
TEXTILES & APPAREL
Dewan Salman Fibre Ltd.-/- ................................ PAK 50 112 --
TEXTILES & APPAREL
------------
50,261,512
------------
Multi-Industry/Miscellaneous (8.9%)
Malbak Ltd. ............................................... SAFR 1,600,000 10,640,340 2.2
CONGLOMERATE
Hutchison Whampoa ......................................... HK 1,857,000 10,232,331 2.1
CONGLOMERATE
Grupo Carso S.A. de C.V. .................................. MEX -- -- 2.1
CONGLOMERATE
"A1"-/- ................................................. -- 1,829,000 9,581,699 --
"A1" 144A ADR{.} -/- {\/} ............................... -- 24,600 255,225 --
Renong Bhd. .............................................. MAL 3,320,000 5,070,498 1.1
MULTI-INDUSTRY
BPL Ltd.-/- ............................................... IND 648,700 1,655,041 0.3
MISCELLANEOUS
KEC International Ltd.-/- ................................. IND 481,500 1,581,466 0.3
MISCELLANEOUS
Koc Holding AS-/- ......................................... AUSL 6,838,200 1,366,573 0.3
CONGLOMERATE
Swire Pacific Ltd. "A" .................................... HK 159,000 1,192,829 0.2
MULTI-INDUSTRY
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 29,500 1,179,097 0.2
MISCELLANEOUS
Nicholas Piramel India Ltd.-/- ........................... IND 80,000 574,780 0.1
MISCELLANEOUS
Grasim Industries Ltd.-/- ................................. IND 6,500 114,751 --
MISCELLANEOUS
------------
43,444,630
------------
Services (5.7%)
Resorts World Bhd. ........................................ MAL 1,276,000 6,228,065 1.3
LEISURE & TOURISM
Pakistan Telecommunications Co., Ltd. - 144A GDR{.} -/- {\/
} ....................................................... PAK 59,733 5,585,036 1.2
TELEPHONE NETWORKS
Daewoo Corp.-/- ........................................... KOR 329,500 4,565,024 1.0
WHOLESALE & INTERNATIONAL TRADE
Berjaya Sports Toto Bhd. .................................. MAL 1,577,000 3,289,943 0.7
CONSUMER SERVICES
McCarthy Retail Ltd.-/- ................................... SAFR 687,100 2,882,937 0.6
RETAILERS-OTHER
CPT Telefonica De Peru "B" ................................ PERU 1,185,952 2,120,576 0.4
TELEPHONE NETWORKS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Grupo Televisa, S.A. de C.V. - GDR{\/} .................... MEX 47,200 $ 808,300 0.2
BROADCASTING & PUBLISHING
Gran Cadena de Almacenes Colombianos S.A. ................. COL 460,000 516,673 0.1
RETAILERS-OTHER
Keppel Philippine Holding "B"-/- ......................... PHIL 925,661 427,557 0.1
TRANSPORTATION - SHIPPING
Dusit Thani PLC - Foreign-/- .............................. THAI 259,747 402,628 0.1
LEISURE & TOURISM
Indian Hotels Co., Ltd.-/- ................................ IND 3,000 48,387 --
LEISURE & TOURISM
------------
26,875,126
------------
Capital Goods (5.0%)
Hindalco Industries Ltd. - GDR{.} -/- {\/} ................ IND 210,000 6,594,000 1.4
INDUSTRIAL COMPONENTS
Tata Engineering and Locomotive Co., Ltd. ................. IND 450,860 5,487,006 1.1
MACHINERY & ENGINEERING
Delta Electrical Industries Ltd. .......................... ZBBW 3,500,000 5,380,259 1.1
ELECTRICAL PLANT/EQUIPMENT
Murray & Roberts Holdings Ltd. ............................ SAFR 445,000 3,111,888 0.6
CONSTRUCTION
Netas Telekomunik-/- ...................................... TRKY 7,060,020 2,443,271 0.5
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- .............................. IND 1,600,000 1,219,941 0.3
TELECOM EQUIPMENT
------------
24,236,365
------------
Consumer Durables (3.7%)
Samsung Electronics Co.: .................................. KOR -- -- 2.9
CONSUMER ELECTRONICS
Common-/- ............................................... -- 37,601 8,421,523 --
New-/- .................................................. -- 21,021 4,566,846 --
New 2-/- ................................................ -- 727 157,942 --
Tofas Turk Otomobil Fabrikasi - GDR-/- {\/} ............... TRKY 3,444,720 2,583,540 0.5
AUTOMOBILES
Brasmotor S.A. Preferred .................................. BRZL 7,910,000 1,851,014 0.4
APPLIANCES & HOUSEHOLD
------------
17,580,865
------------
Technology (1.1%)
SPT Telecom-/- ........................................... CZCH 50,000 4,924,460 1.0
TELECOM TECHNOLOGY
Himachal Telematics Ltd.-/- ............................... IND 750,000 670,821 0.1
TELECOM TECHNOLOGY
------------
5,595,281
------------
Health Care (0.9%)
Ranbaxy Laboratories Ltd.-/- .............................. IND 225,200 4,253,044 0.9
MEDICAL TECHNOLOGY & SUPPLIES
Core Healthcare-/- ........................................ IND 29,400 116,393 --
PHARMACEUTICALS
------------
4,369,437
------------ -----
TOTAL EQUITY INVESTMENTS (cost $456,709,363) ................ 454,021,780 94.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (1.1%)
Argentina (1.1%)
Republic of Argentina, Par Bond, 5.25% due 3/31/23=/=
(cost $5,784,037) ...................................... USD 11,250,000 $ 5,371,875 1.1
------------
Corporate Bonds (0.2%)
India (0.1%)
Mahavir Spinning Mills Ltd., Convertible Bond, 14%
2/22/02 ................................................ INR 6,785,800 188,789 0.1
Korea (0.1%)
Yukong Ltd., 1% due 12/31/98 ............................ CHF 500,000 478,016 0.1
------------
Total Corporate Bonds (cost $1,021,985) ..................... 666,805
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $6,806,022) ............ 6,038,680 1.3
------------ -----
<CAPTION>
No. of Market % of Net
Warrants (0.2%) Country Warrants Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Tata Engineering & Locomotive Co. Ltd. Warrants, expire
3/8/96-/- {\/} ........................................... IND 142,500 819,375 0.2
AUTOMOBILES
National Finance & Securities Public Co., Ltd. Warrants,
expire 11/15/99-/- ....................................... THAI 411,000 245,032 --
SECURITIES BROKER
Securities One Ltd. Warrants, expire 9/16/00-/- .......... THAI 20,883 8,300 --
WARRANTS
Dragon Oil PLC Warrants, expire 11/1/99-/- ................ UK 923,076 7,295 --
OIL
------------ -----
TOTAL WARRANTS (cost $437,850) .............................. 1,080,002 0.2
------------ -----
<CAPTION>
No. of Market % of Net
Rights (0.0%) Country Rights Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Dewan Salmon Fibre Ltd. Rights, expire 12/31/95-/- ........ PAK 15,000 -- --
TEXTILES & APPAREL
SCF Finance & Securities Co., Ltd. Rights, expire
12/31/95-/- .............................................. THAI 43,842 -- --
BANKS-MONEY CENTER
Siam City Finance & Securities Co., Ltd. Rights, expire
12/31/95-/- .............................................. THAI 34,816 -- --
BANKS-MONEY CENTER
------------ -----
TOTAL RIGHTS (cost $0) ..................................... -- --
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (2.8%)
Mexico (2.8%)
Mexican Cetes: .......................................... MXN -- -- 2.8
Effective yield 45.15%, due 8/22/96 ................... -- 33,500,000 $ 3,434,315 --
Effective yield 45.14%, due 10/3/96 ................... -- 33,180,330 3,275,998 --
Effective yield 45.14%, due 9/19/96 ................... -- 23,500,000 2,349,142 --
Effective yield 45.15%, due 8/29/96 ................... -- 20,707,860 2,109,439 --
Effective yield 45.15%, due 9/5/96 .................... -- 11,100,000 1,123,594 --
Effective yield 45.16%, due 8/15/96 ................... -- 7,084,500 730,947 --
Effective yield 45.14%, due 9/26/96 ................... -- 5,028,570 499,559 --
------------
Total Treasury Bills (cost $15,393,816) ..................... 13,522,994
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $15,393,816) ............. 13,522,994 2.8
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995 for an effective yield of
5.80% collateralized by $7,860,000, U.S. Treasury Strips,
due 8/15/00 (market value of collateral is $8,947,104,
including accrued interest). (cost $8,771,413) .......... 8,771,413 1.8
------------ -----
TOTAL INVESTMENTS (cost $488,118,464) ...................... 483,434,869 100.7
Other Assets and Liabilities ................................ (3,442,182) (0.7)
------------ -----
NET ASSETS .................................................. $479,992,687 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $479,992,687.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} 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.
{::} See Note 5 of Notes to Financial Statements.
=/= The coupon rate shown on step-up coupon bond represents the rate at
period end.
* For Federal income tax purposes, cost is $489,840,394 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 53,173,590
Unrealized depreciation: (59,579,115)
-------------
Net unrealized depreciation: $ (6,405,525)
-------------
-------------
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 0.4 1.1 1.5
Australia (AUSL/AUD) ................. 0.3 0.3
Bolivia (BOL/BOL) .................... 1.8 1.8
Brazil (BRZL/BRL) .................... 6.5 6.5
Chile (CHLE/CLP) ..................... 2.2 2.2
Colombia (COL/COP) ................... 0.4 0.4
Czech Republic (CZCH/CSK) ........... 1.8 1.8
Greece (GREC/GRD) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 8.6 8.6
India (IND/INR) ...................... 7.2 0.3 7.5
Korea (KOR/KRW) ...................... 14.0 0.1 14.1
Malaysia (MAL/MYR) ................... 6.5 6.5
Mexico (MEX/MXN) ..................... 8.1 2.8 10.9
Pakistan (PAK/PKR) .................. 1.7 1.7
Panama (PAN/PND) ..................... 0.1 0.1
Peru (PERU/PES) ...................... 0.5 0.5
Philippines (PHIL/PHP) ............... 0.1 0.1
Singapore (SING/SGD) ................. 1.1 1.1
South Africa (S AFR/ZAR) ............. 18.9 18.9
Thailand (THAI/THB) .................. 8.3 8.3
Turkey (TRKY/TRL) .................... 2.0 2.0
United Kingdom (UK/GBP) .............. 0.1 0.1
United States (US/USD) ............... 1.1 1.1
Venezuela (VENZ/VEB) ................. 0.8 0.8
Zimbabwe (ZBBW/ZWD) .................. 1.1 1.1
------ --- --- -----
Total ............................... 94.6 1.5 3.9 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $479,992,687.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $488,118,464)
(Note 1)................................................. $483,434,869
U.S. currency.............................. $ 512 --
Foreign currencies (cost $5,032,122)....... 4,833,255 4,833,767
----------
Receivable for securities sold............................ 2,587,251
Dividends receivable...................................... 947,644
Receivable for Fund shares sold........................... 594,544
Interest receivable....................................... 272,508
Unamortized organizational costs (Note 1)................. 46,409
Cash held as collateral for securities loaned (Note 1).... 7,974,500
------------
Total assets............................................ 500,691,492
------------
Liabilities:
Payable for securities purchased.......................... 7,912,571
Payable for Fund shares repurchased....................... 3,724,139
Payable for investment management and administration fees
(Note 2)................................................. 415,732
Payable for service and distribution expenses (Note 2).... 309,997
Payable for transfer agent fees (Note 2).................. 150,596
Payable for printing and postage expenses................. 98,561
Payable for custodian fees (Note 1)....................... 36,517
Payable for professional fees............................. 31,623
Payable for registration and filing fees.................. 17,956
Payable for fund accounting fees (Note 2)................. 10,747
Payable for Directors' fees and expenses (Note 2)......... 4,399
Other accrued expenses.................................... 11,467
Collateral for securities loaned (Note 1)................. 7,974,500
------------
Total liabilities....................................... 20,698,805
------------
Net assets.................................................. $479,992,687
------------
------------
Class A:
Net asset value and redemption price per share ($252,456,916
DIVIDED BY 18,232,878 shares outstanding).................. $ 13.85
------------
------------
Maximum offering price per share (100/95.25 of $13.85) *.... $ 14.54
------------
------------
Class B:+
Net asset value and offering price per share ($225,860,627
DIVIDED BY 16,510,242 shares outstanding).................. $ 13.68
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share ($1,675,144 DIVIDED BY 120,718 shares
outstanding)............................................... $ 13.88
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................. $522,570,214
Undistributed net investment income....................... 40,513
Accumulated net realized loss on investments and foreign
currency transactions.................................... (37,564,716)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies........................ (369,729)
Net unrealized depreciation of investments................ (4,683,595)
------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $479,992,687
------------
------------
<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 50
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$927,107)................................................... $ 9,668,900
Interest income.............................................. 7,101,959
-------------
Total investment income.................................... 16,770,859
-------------
Expenses:
Investment management and administration fees (Note 2)....... 5,410,744
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,518,742
Class B.................................. 2,519,288 4,038,030
-------------
Transfer agent fees (Note 2)................................. 1,961,000
Custodian fees (Note 1)...................................... 923,573
Printing and postage expenses................................ 323,393
Registration and filing fees................................. 201,785
Fund accounting fees (Note 1)................................ 140,645
Audit fees................................................... 49,130
Amortization of organization costs (Note 1).................. 29,985
Legal fees................................................... 29,325
Directors' fees and expenses (Note 2)........................ 20,610
Insurance expenses........................................... 8,104
-------------
Total expenses before reductions........................... 13,136,324
-------------
Expense reductions (Notes 1 & 6)......................... (80,993)
-------------
Total net expenses......................................... 13,055,331
-------------
Net investment income.......................................... 3,715,528
-------------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... (38,362,863)
Net realized loss on foreign currency
transactions.............................. (1,596,521)
-------------
Net realized loss during the year.......................... (39,959,384)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (337,162)
Net change in unrealized depreciation of
investments............................... (117,020,037)
-------------
Net unrealized depreciation during the year................ (117,357,199)
-------------
Net realized and unrealized loss on investments and foreign
currencies.................................................... (157,316,583)
-------------
Net decrease in net assets resulting from operations........... $(153,601,055)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)............... $ 3,715,528 $ (1,425,620)
Net realized gain (loss) on investments and
foreign currency transactions............. (39,959,384) 28,233,921
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... (337,162) 34,245
Net change in unrealized appreciation
(depreciation) of investments............. (117,020,037) 81,938,011
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (153,601,055) 108,780,557
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (15,193,744) (4,115,024)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (12,477,553) (1,126,597)
----------------- -----------------
Total distributions...................... (27,671,297) (5,241,621)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 550,507,913 883,196,940
Decrease from capital shares repurchased... (597,853,943) (498,150,727)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (47,346,030) 385,046,213
----------------- -----------------
Total increase (decrease) in net assets...... (228,618,382) 488,585,149
Net assets:
Beginning of year.......................... 708,611,069 220,025,920
----------------- -----------------
End of year................................ $ 479,992,687 $ 708,611,069
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------
MAY 18, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
------------------------------------- TO OCTOBER 31,
1995(D) 1994 1993 1992
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.81 $ 14.42 $ 11.10 $ 11.43
----------- ----------- ----------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.13 (0.02) 0.02** 0.07**
Net realized and unrealized gain
(loss) on investments................ (4.32) 4.68 3.38 (0.40)
----------- ----------- ----------- ----------------
Net increase (decrease) from
investment operations.............. (4.19) 4.66 3.40 (0.33)
----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.01) (0.08) --
From net realized gain on
investments.......................... (0.77) (0.26) -- --
----------- ----------- ----------- ----------------
Total distributions................. (0.77) (0.27) (0.08) --
----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 13.85 $ 18.81 $ 14.42 $ 11.10
----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------------
Total investment return (c)............. (23.04)% 32.58% 30.90% (2.90)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 252,457 $ 417,322 $ 187,808 $ 84,558
Ratio of net investment income (loss) to
average net assets..................... 0.89% (0.11)% 0.1%** 1.7 %**(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.12% 2.06% 2.4%** 2.4 %**(b)
Without expense reductions............ 2.14% --%* --%* -- %*
Portfolio turnover rate++++............. 114% 100% 99% 32 %(b)
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993
were reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class
shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares
issued.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02 for the year ended October 31, 1993
and for the period from May 18, 1992 to October 31, 1992,
respectively. Without such reimbursements, the expense ratios
would have been 2.61% and 2.91% and the ratio of net investment
income to average net assets would have been 0.36% and 1.21% for
the year ended October 31, 1993 and for the period from May 18,
1992 to October 31, 1992, respectively (See Note 2).
*** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net
investment income to average net assets would have been (0.76%).
(See Note 2).
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
--------------------------------------- CLASS+++
APRIL 1, -------------
YEAR ENDED 1993 JUNE 1, 1995
OCTOBER 31, TO TO
----------------------- OCTOBER 31, OCTOBER 31,
1995(D) 1994 1993 1995
---------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.68 $ 14.39 $ 11.47 $14.71
---------- ---------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.06 (0.12) 0.00*** 0.08
Net realized and unrealized gain
(loss) on investments................ (4.29) 4.67 2.92 (0.91)
---------- ---------- ------------- -------------
Net increase (decrease) from
investment operations.............. (4.23) 4.55 2.92 (0.83)
---------- ---------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- --
From net realized gain on
investments.......................... (0.77) (0.26) -- --
---------- ---------- ------------- -------------
Total distributions................. (0.77) (0.26) -- --
---------- ---------- ------------- -------------
Net asset value, end of period.......... $ 13.68 $ 18.68 $ 14.39 $13.88
---------- ---------- ------------- -------------
---------- ---------- ------------- -------------
Total investment return (c)............. (23.37)% 31.77% 25.50%(a) (5.71)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $225,861 $291,289 $32,318 $1,675
Ratio of net investment income (loss) to
average net assets..................... 0.39% (0.61)% (0.4)%***(b) 1.39%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.62% 2.56% 2.9%***(b) 1.62%(b)
Without expense reductions............ 2.64% --%* --%* 1.64%(b)
Portfolio turnover rate++++............. 114% 100% 99% 114%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993
were reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class
shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares
issued.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02 for the year ended October 31, 1993
and for the period from May 18, 1992 to October 31, 1992,
respectively. Without such reimbursements, the expense ratios
would have been 2.61% and 2.91% and the ratio of net investment
income to average net assets would have been 0.36% and 1.21% for
the year ended October 31, 1993 and for the period from May 18,
1992 to October 31, 1992, respectively (See Note 2).
*** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net
investment income to average net assets would have been (0.76%).
(See Note 2).
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Emerging Markets Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records 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 Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or in the case of an over-the-counter option, is valued at the average of
the last bid prices obtained from brokers. 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 securities
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 Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund would
realize a gain or loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying security,
and the proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
"variation margin" and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed. The potential risk to the Fund is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Fund may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $7,467,563
were on loan to brokers. The loans were secured by cash collateral of $7,974,500
received by the Fund. For international securities, cash collateral is received
by the Fund against loaned securities in an amount at least equal to 105% of the
market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 103% of the market value of the
loaned securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1995, the Fund received fees of $64,388 which were
used to reduce the Fund's custodian fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$35,842,783 which expires in 2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $61,975. These expenses
are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(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.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$230,239 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $56,294 for the period ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $1,059,193. 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%, 2.90% and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $33,216 to G.T. Capital.
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$580,388,902 and $563,548,434, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year ended October 31, 1995.
4. CAPITAL SHARES
At October 31, 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
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold............................................................... 26,517,243 $ 389,593,563 31,738,988 $ 542,276,829
Shares issued in connection with reinvestment of distributions............ 788,804 13,204,560 224,680 3,671,269
----------- ------------- ----------- -------------
27,306,047 402,798,123 31,963,668 545,948,098
Shares repurchased........................................................ (31,260,135) (469,990,809) (22,802,389) (390,541,648)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (3,954,088) $ (67,192,686) 9,161,279 $ 155,406,450
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold............................................................... 9,004,842 $ 135,163,005 19,746,670 $ 336,338,827
Shares issued in connection with reinvestment of distributions............ 637,782 10,599,912 55,761 910,015
----------- ------------- ----------- -------------
9,642,624 145,762,917 19,802,431 337,248,842
Shares repurchased........................................................ (8,726,345) (127,721,360) (6,446,858) (107,609,079)
----------- ------------- ----------- -------------
Net increase.............................................................. 916,279 $ 18,041,557 13,355,573 $ 229,639,763
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
ADVISOR CLASS:
Shares sold............................................................... 130,495 $ 1,946,873
Shares repurchased........................................................ (9,777) (141,774)
----------- -------------
Net increase.............................................................. 120,718 $ 1,805,099
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $8,495,763,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ----------------------------------------------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviara de Energia Electrica...................................... $ -- $ -- $ -- $ 218,775
</TABLE>
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $16,605 under these arrangements.
7. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$17,505,694 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 61
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 62
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 63
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL EMERGING MARKETS FUND, G.T. INVESTMENT FUNDS, INC., LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL INFORMATION
DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
EMESA602
<PAGE>
GT 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
February 29, 1996
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This Statement of Additional Information relates to the Advisor Class shares of
GT Global Financial Services Fund ("Financial Services Fund"), GT Global
Infrastructure Fund ("Infrastructure Fund"), GT Global Natural Resources Fund
("Natural Resources Fund"), GT Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), GT Global Health Care Fund ("Health
Care Fund") and GT 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 GT Global Theme Funds' current Advisor
Class Prospectus dated February 29, 1996, 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.
LGT Asset Management, Inc. ("LGT Asset Management") 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 GT Global, Inc. ("GT Global"). The Funds' transfer agent is
GT Global Investor Services, Inc. ("GT Services" or "Transfer Agent").
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TABLE OF CONTENTS
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Page No.
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Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
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.................................................................................................................... 32
Additional Information................................................................................................... 35
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 46
Financial Statements..................................................................................................... 48
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Statement of Additional Information Page 1
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVE
AND POLICIES
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INVESTMENT OBJECTIVE
The investment objective of each Feeder Fund is long-term capital growth. The
investment objective of the GT 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.
SELECTION OF EQUITY INVESTMENTS
In analyzing the natural resource industry, LGT Asset Management 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, LGT Asset Management 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 LGT Asset Management, 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 to
satisfy redemptions.
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it (a) is organized under the
laws of or has its principal office in a particular country, or (b) normally
derives 50% or more of its total revenues from business in that country,
provided that, in LGT Asset Management's view, the value of such issuer's
securities will tend to reflect such country's development to a greater extent
than developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by LGT
Asset Management 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. LGT
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL THEME FUNDS
Asset Management 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
Additional Information. Restrictions may in the future, however, make it
undesirable to invest in certain countries. None of the Theme Portfolios has a
present intention of making any significant investment in any country or stock
market in which LGT Asset Management considers the political or economic
situation 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 Investment Company Act of 1940, as amended (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 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 LGT Asset Management, 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 and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. 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
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL THEME FUNDS
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.
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 LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, 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
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 becomes bankrupt, the
Theme Portfolios intend to enter into repurchase agreements only with banks and
dealers believed by LGT Asset Management 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. LGT Asset Management will review
and monitor the creditworthiness of such institutions under the applicable
Board's general supervision.
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, 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
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL THEME FUNDS
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 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 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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GT GLOBAL THEME FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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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 LGT Asset
Management'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 LGT Asset Management 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 LGT Asset Management 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 LGT Asset Management 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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GT 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, LGT Asset Management 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, indices 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 LGT
Asset Management 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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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 greater 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 LGT Asset Management 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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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 an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A 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
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equal to the difference between the closing level of the index and the exercise
price times the multiplier, if the closing level is less than the exercise
price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a 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
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effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the 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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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, 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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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 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 LGT Asset Management
believes will have a
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positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a 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.
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 is used for cover or otherwise set aside, 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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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 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.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell
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GT GLOBAL THEME FUNDS
and the time the Theme Portfolio may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the Theme Portfolio might obtain a less favorable
price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
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 1933 Act, are liquid or illiquid.
Each Board has delegated the function of making day-to-day determinations of
liquidity to LGT Asset Management, in accordance with procedures approved by
that Board. LGT Asset Management 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). LGT Asset
Management 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 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
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GT GLOBAL THEME FUNDS
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, LGT Asset Management
will take appropriate steps to evaluate the proposed investment, which may
include on-site inspection of the issuer, interviews with its management and
consultations with accountants, bankers and other specialists. There is
substantially less publicly available information about foreign companies than
there are reports and ratings published about U.S. companies and the U.S.
government. In addition, where public information is available, it may be less
reliable than such information regarding U.S. issuers. Issuers of securities in
foreign jurisdictions are generally not subject to the same degree of regulation
as are U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because each 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 a 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. LGT Asset Management will consider such difficulties when determining
the allocation of a Theme Portfolio's assets, although LGT Asset Management does
not believe that such difficulties will have a material adverse effect on a
Theme Portfolio's portfolio trading activities.
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GT GLOBAL THEME FUNDS
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,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and
the United Kingdom) eliminated certain import tariffs and quotas and other trade
barriers with respect to one another over the past several years. LGT Asset
Management 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
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 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 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.
DIVERSIFICATION REQUIREMENTS UNDER INTERNAL REVENUE CODE. The investment
flexibility of each Theme Portfolio may be restricted by the necessity of
satisfying certain diversification requirements in order to maintain the
qualification of the Theme Portfolio as a regulated investment company within
the meaning of the Internal Revenue Code of 1986, as amended (the "Code").
Statement of Additional Information Page 17
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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 its 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 affirmative vote 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.
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GT GLOBAL THEME FUNDS
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
Portfolios' 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;
(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 its corresponding Portfolio's 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 affirmative vote 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;
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GT GLOBAL THEME FUNDS
(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
(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 its 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 affirmative vote 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;
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL THEME FUNDS
(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 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.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL THEME FUNDS
------------------------
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.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, LGT Asset Management 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, LGT Asset Management 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 LGT Asset Management 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, LGT Asset Management may
select broker/dealers to execute that Theme Portfolio's portfolio transaction on
the basis of the research and brokerage services they provide to LGT Asset
Management 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 LGT Asset Management 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 LGT Asset Management determines in good
faith that such commission is reasonable in terms either of that particular
transaction or the overall responsibility of LGT Asset Management 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.
LGT Asset Management 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 LGT Asset Management 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 LGT Asset Management 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 the Portfolios'
Board of Trustees, and subject to the policy of obtaining the best net results,
LGT Asset Management may consider a broker/dealer's sale of the shares of the
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL THEME FUNDS
Funds and the other portfolios for which LGT Asset Management 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
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 Liechtenstein Global Trust. 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, 1995, 1994, and 1993, the Health Care
Fund paid aggregate brokerage commissions of $545,743, $480,241, and $665,620,
respectively. For the fiscal years ended October 31, 1995, 1994 and 1993, the
Telecommunications Fund paid aggregate brokerage commissions of $2,253,982,
$5,674,965, and $2,051,270, respectively. For the fiscal October 31, 1995, the
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio paid aggregate brokerage commissions of $38,814, $122,399 and $98,462,
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. For the fiscal period December 30, 1994
(commencement of operations) to October 31, 1995, the Consumer Products and
Services Portfolio paid aggregate brokerage commissions of $17,605.
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. 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. The portfolio turnover rate will not be a limiting
factor when management deems portfolio changes appropriate. Higher portfolio
turnover involves correspondingly greater brokerage commissions and other
transaction costs that the Theme Portfolio will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to each
Fund's shareholders. For the fiscal years ended October 31, 1995 and 1994, the
Telecommunications Fund's portfolio turnover rates were 62% and 57%,
respectively. For the fiscal years ended October 31, 1995 and 1994, the Health
Care Fund's portfolio turnover rates were 99% and 64%, respectively. For the
fiscal year ended October 31, 1995, the portfolio turnover rates for the
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio were 170%, 45%, and 87%, 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. For the fiscal period
December 30, 1994 (commencement of operations) to October 31, 1995, the
portfolio turnover rate for the Consumer Products and Services Portfolio was
240%.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL THEME FUNDS
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers and the Portfolios' Trustees and
Executive Officers are listed below. The term "Directors" as used below refers
to the Company's Directors and the Portfolios' Trustees collectively.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust Limited (holding company of the various
Director, Chairman of the Board and international LGT companies) since 1990; President of the Asset Management Division,
President Liechtenstein Global Trust Limited, since 1995; Director and President of LGT Asset
50 California Street Management Holdings, Inc. ("LGT Asset Management Holdings") since 1988; Director and
San Francisco, CA 94111 President of LGT Asset Management since 1989; Director of GT Global since 1987; President
of GT Global from 1987 to 1995; Director of GT Services since 1990; President of GT
Services from 1990 to 1995; Director of G.T. Global Insurance Agency, Inc. ("G.T.
Insurance") since 1992; and President of G.T. Insurance from 1992 to 1995. Mr. Minella
also is a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989, Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995 Senior Vice
Senior Vice President and President -- Finance and Administration of GT Global, GT Services and
Chief Financial Officer G.T. Insurance. Senior Vice President -- Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President -- Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President -- Finance of GT Insurance from 1992 to 1994; and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President -- Mutual Fund Accounting at of LGT Asset Management
Vice President and Principal since 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust
Accounting Officer Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 49 Senior Vice President, General Counsel and Secretary of LGT Asset
Vice President and Secretary Management Holdings, LGT Asset Management, GT Global, GT Services and
50 California Street G.T. Insurance since February, 1996. Senior Vice President, Secretary
San Francisco, CA 94111 and General Counsel of LGT Asset Management Holdings, LGT Asset
Management, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996. Mr. Lee was the Senior Vice President, General Counsel
and Secretary of Strong/Corneliuson Management, Inc. and Secretary of
each of the Strong Funds from October, 1991 through May, 1994. 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 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Mr. Guarino
50 California Street has been an Assistant General Counsel of LGT Asset Management, GT Global
San Francisco, CA 94111 and GT Services since 1991, and Assistant General Counsel of G.T.
Insurance since 1992. From 1989 to 1991, Mr. Guarino was an attorney at
The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February, 1996.
50 California Street Assistant General Counsel of LGT Asset Management since January 1995.
San Francisco, CA 94111 From 1993 to 1994, Mr. Thelander was an associate at Kirkpatrick &
Lockhart LLP (a law firm). Prior thereto, he was an attorney with the
U.S. Securities and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Ms.
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 LGT
Asset Management. Each Director and Officer serves in total as a Director and or
Trustee and officer, respectively of 10 registered investment companies with 40
series managed or administrated by LGT Asset Management. The Company pays each
Director who is not a director, officer or employee of LGT Asset Management 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. For
the fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley, Mr. Patterson
and Ms. Quigley, who are not directors, officers or employees of LGT Asset
Management or any affiliated company, received total compensation of $36,705,
$34,230, $36,755 and $33,706, respectively, from the Company for their services
as Directors. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley who are not directors, officers or
employees of
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL THEME FUNDS
LGT Asset Management or any affiliated company, received total compensation of
$92,177, $87,869, $92,261 and $86,958, respectively, from the 40 investment
companies managed or administered by LGT Asset Management 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 February
22, 1996, 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, with the exception of
the Financial Services Fund and the Consumer Products and Services Fund. As of
February 22, 1996, the Officers and Directors and their families or a group
owned in the aggregate beneficially or of record 1.05% of the outstanding shares
of the Financial Services Fund and 9.85% of the Consumer Products and Services
Fund.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
LGT Asset Management serves as each Portfolio's investment manager and
administrator under an Investment Management and Administration Contract between
each Portfolio and LGT Asset Management ("Portfolio Management Contract") LGT
Asset Management serves as administrator to each Feeder Fund under an
administration contract between the Company and LGT Asset Management
("Administration Contract"). The Administration Contract will not be deemed an
advisory contract, as defined under the 1940 Act. As investment manager and
administrator, LGT Asset Management makes all investment decisions for each
Portfolio and, as administrator, administers each Portfolio's and each Feeder
Fund's affairs. Among other things, LGT Asset Management 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 LGT Asset Management 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 LGT Asset
Management. 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 may be renewed with respect to Portfolio for
additional one-year terms, 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. 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 LGT
Asset Management 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, LGT Asset Management 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, exceeds 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. LGT Asset Management and GT 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
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL THEME FUNDS
the average daily net assets of the Fund's Advisor Class shares during each
fiscal year, and LGT Asset Management has agreed to reimburse each Feeder Fund
if its expenses exceed that amount.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
LGT Asset Management 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 LGT
Asset Management. As investment manager and administrator, LGT Asset Management
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, LGT Asset Management 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 LGT Asset Management investment
management and administration fees, based on the Health Care Fund's 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 may be renewed for additional one-year terms 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 provides that with respect to the
Health Care Fund and Telecommunications Fund either the Company or LGT Asset
Management 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, LGT Asset Management 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, GT Global and LGT Asset
Management have voluntarily undertaken to limit the Health Care Fund's and
Telecommunications Fund's Advisor Class expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual level of
1.90% of the average daily net assets of each Fund's Advisor Class shares,
respectively, during each fiscal year, and LGT Asset Management 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>
GT GLOBAL THEME FUNDS
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to LGT Asset Management during
the periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1995...................................................................................................... $ 4,453,857
1994...................................................................................................... 4,353,688
1993...................................................................................................... 5,331,224
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1995...................................................................................................... $ 23,861,460
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>
1995...................................................................................................... $ 51,353
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 8,249
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
1995...................................................................................................... $ 601,421
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 51,922
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
1995...................................................................................................... $ 213,856
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 28,500
</TABLE>
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
December 30, 1994 (commencement of operations) to October 31, 1995........................................ $ 16,284
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, and for the fiscal year ended October 31, 1995, LGT Asset Management
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 and $51,353, $48,901 and $0, and
$28,500 and $213,856, respectively; for the same periods, the Financial Services
Fund, Infrastructure Fund and Natural Resources Fund paid administration fees of
$3,029 and $18,756, $19,370 and $208,892, and $10,436 and $74,485, respectively.
However, LGT Asset Management reimbursed those Funds for such fees in the
amounts of $3,029 and $18,756, $19,370 and $177,376, and $10,436 and $74,485,
respectively. (Accordingly, LGT Asset Management 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 and $70,109, $68,271 and $177,376, and $38,936 and
$288,341, respectively.) For the fiscal period December 30, 1994 (commencement
of operations) to October 31, 1995, LGT Asset Management reimbursed the Consumer
Products and Services Portfolio for investment management and administration
fees in the amount of $16,284. For the same period, the Consumer Products and
Services Fund paid $5,933 in administration fees; however, LGT Asset Management
reimbursed the Fund in the amount of $5,933. Accordingly, LGT Asset Management
reimbursed the Consumer Products and Services Fund and its Portfolio investment
management and administration fees in the aggregate amount of $22,217.
For the fiscal year ended October 31, 1995, LGT Asset Management, pursuant to a
voluntary expense undertaking to limit expenses to the maximum annual level of
1.90%, respectively, of average daily net assets of the Advisor Class shares of
the
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL THEME FUNDS
Funds, reimbursed the Financial Services Fund, Natural Resources Fund, and
Consumer Products and Services Fund for expenses in the additional amounts of
$438,217, $30,769, and $244,975, respectively.
DISTRIBUTION SERVICES RELATING TO EACH FUND
Each Fund's Advisor Class shares are offered continuously through each Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
GT 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.
As of October 31, 1995, the Health Care Fund, Telecommunications Fund, Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund paid LGT Asset Management fees of $30,660, $170,297, $616,
$5,836, $1,931 and $318, respectively, for accounting services.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by LGT Asset
Management, GT Global and other agents. These expenses include, in addition to
the advisory, administration, distribution, transfer agency, pricing and
accounting agency and brokerage fees described above, legal and audit expenses,
custodian fees, trustees' fees, organizational fees, fidelity bond and other
insurance premiums, taxes, extraordinary expenses and expenses of reports and
prospectuses sent to existing investors. The allocation of general Company
expenses and expenses shared 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 LGT Asset Management 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.
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
LGT Asset Management 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.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL THEME FUNDS
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, unless a quotation from
only one dealer is available, in which case only that dealers price will be
used, in the case of OTC options. 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 (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. 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 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 LGT Asset Management, 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
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL THEME FUNDS
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 GT 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 GT 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 GT 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 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.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL THEME FUNDS
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the 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 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 and to the Health Care Fund and Telecommunications Fund of those
transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FEEDER FUNDS. Each Portfolio is
treated as a separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each 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 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 the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in its 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
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL THEME FUNDS
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 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.
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. Gains from foreign currencies (except certain gains that may be
excluded by future regulations), and gains from the disposition of 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-
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL THEME FUNDS
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 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 securities and options, Futures
and Forward Contracts on foreign currencies ("Section 988 gains or losses").
Each Section 988 gain or loss generally is computed separately and treated as
ordinary income or loss. In the case of overlap between sections 1256 and 988,
special provisions determine the character and timing of any income, gain or
loss. Each 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>
GT GLOBAL THEME FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) Ltd. in
Tokyo; LGT Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE
Ltd. located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
THE COMPANY
The Company was organized as a Maryland corporation on October 29, 1987. Until
April 28, 1989, the name of the Company was GT 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 are included in reliance upon such
opinion given upon the authority of said firm as experts in accounting and
auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" name and has reserved the right to withdraw its consent to the use of
such names by the Company at any time, or to grant the use of such names to any
other company.
Statement of Additional Information Page 35
<PAGE>
GT 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, Class B and Advisor class 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 Advisor Class shares of the Health Care Fund and
Telecommunications Fund, stated as aggregate total returns for the period June
1, 1995 (commencement of operations) to October 31, 1995, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- ---------------------------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 through October 31, 1995............................................................... 17.10% 7.94%
</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 Advisor
Class shares of the Health Care Fund and Telecommunications Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
TELECOMMUNI-
HEALTH CARE CATIONS
PERIOD FUND FUND
- ---------------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
June 1, 1995 through October 31, 1995............................................................... 17.10% 7.94%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for Advisor Class shares, stated as aggregate total returns
for the period June 1, 1995 (commencement of operations) to October 31, 1995,
were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
June 1, 1995 through October 31, 1995............................ 7.75% 1.17% 0.17%
</TABLE>
The Non-Standardized Returns for Advisor Class shares of Financial Services
Fund, Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns for the period June 1, 1995 (commencement of operations) to October 31,
1995, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
June 1, 1995 through October 31, 1995............................ 7.75% 1.17% 0.17%
</TABLE>
The Standardized Return for the Advisor Class shares of Consumer Products and
Services Fund stated as aggregate total return for the period June 1, 1995
(commencement of operations) to October 31, 1995 was 23.65%.
The Non-Standardized Return for Advisor Class shares of Consumer Products and
Services Fund stated as aggregate total return for the period June 1, 1995,
through October 31, 1995, was 23.65%.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL THEME FUNDS
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:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.10%
January 27, 1992 through October 31, 1995............................................................. n/a
November 1, 1990 through October 31, 1995............................................................. 12.56%
August 7, 1989 through October 31, 1995............................................................... 12.05 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.49 %
January 27, 1992 through October 31, 1995............................................................. 11.08 %
November 1, 1990 through October 31, 1995............................................................. n/a
August 7, 1989 through October 31, 1995............................................................... 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, 1995.................................................................... 14.17%
April 1, 1993 through October 31, 1995................................................................ 46.06%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.96 %
April 1, 1993 through October 31, 1995................................................................ 33.92 %
</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
average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.17%
April 1, 1993 through October 31, 1995................................................................ 15.79%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.96 %
April 1, 1993 through October 31, 1995................................................................ 11.97 %
</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, 1995.................................................................... 19.79 % -2.88 %
January 27, 1992 through October 31, 1995............................................................. n/a 55.88 %
August 7, 1989 through October 31, 1995............................................................... 113.42 % 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, 1995.................................................................... 19.17%
April 1, 1993 through October 31, 1995................................................................ 49.06%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -3.37 %
April 1, 1993 through October 31, 1995................................................................ 36.92 %
</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:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.79%
January 27, 1992 through October 31, 1995............................................................. n/a
November 1, 1990 through October 31, 1995............................................................. 13.66%
August 7, 1989 through October 31, 1995............................................................... 12.93 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -2.88 %
January 27, 1992 through October 31, 1995............................................................. 12.53 %
November 1, 1990 through October 31, 1995............................................................. n/a
August 7, 1989 through October 31, 1995............................................................... n/a
</TABLE>
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:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.17%
April 1, 1993 through October 31, 1995................................................................ 16.71%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -3.37 %
April 1, 1993 through October 31, 1995................................................................ 12.93 %
</TABLE>
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL THEME FUNDS
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -2.29% -7.50% -11.97%
May 31, 1994 through October 31, 1995........................................ -0.47% 0.65% -3.14%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -2.29% -7.50% -11.97%
May 31, 1994 through October 31, 1995........................................ -0.67% -0.92% -4.42%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class B shares, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -3.02 % -8.20% -12.64%
May 31, 1994 through October 31, 1995........................................ -0.50 % 1.25% -4.39%
</TABLE>
The Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -3.02 % -8.20% -12.64%
May 31, 1994 through October 31, 1995........................................ -0.35 % 0.88% -3.11%
</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 for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 2.58 % -2.89 %
May 31, 1994 through October 31, 1995........................................ 4.29 % 5.95 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -7.58 %
May 31, 1994 through October 31, 1995........................................ 0.34 %
</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 for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 1.98 % -3.37 %
May 31, 1994 through October 31, 1995........................................ 3.50 % 5.25 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -8.05 %
May 31, 1994 through October 31, 1995........................................ -0.41 %
</TABLE>
The Non-Standardized Returns for the Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 2.58 % -2.89 %
May 31, 1994 through October 31, 1995........................................ 3.00 % 4.16 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -7.58 %
May 31, 1994 through October 31, 1995........................................ 0.24 %
</TABLE>
The Non-Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as avarage annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 1.98% -3.37%
May 31, 1994 through October 31, 1995........................................ 2.45% 3.67%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -8.50%
May 31, 1994 through October 31, 1995........................................ -0.29%
</TABLE>
The Standardized Return for the Class A shares of Consumer Products and Services
Fund stated as aggregate total return for the period December 30, 1994
(commencement of operations) to October 31, 1995 was 21.58%. Standardized Return
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL THEME FUNDS
for Consumer Products and Service Fund's Class B shares, stated as aggregate
total return, for the same period was 22.12%.
The Non-Standardized Return for the Class A shares of Consumer Products and
Services Fund stated as aggregate total return for the period December 30, 1994
(commencement of operations) to October 31, 1995 was 27.65%. Non-Standardized
Return for such Fund's Class B shares for the same period, stated as aggregate
return, was 27.12%.
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present or prospective shareholders compare
a Fund with, but not limited to, 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 Lehman Brothers 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, 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
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard 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.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL THEME FUNDS
(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.
(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunication 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 Service, Inc., Fitch Investor's Service, Inc.,
Standard & Poor's.
(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. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., 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, GT 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.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the 1933 Act on account of the inclusion of such
information herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g. Japanese
Yen, German Deutschemark, 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.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL THEME FUNDS
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
LGT Asset Management, 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 certain
indices relate only to government bonds. Each of these factors will cause the
performance of each Fund to differ from the relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
or rankings by DALBAR Surveys, Inc. in advertising materials.
GT 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. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. 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, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT 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 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 GT Global Mutual 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. In
sales material and advertisements, 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 (or if
less, 100% of compensation) each year to an IRA. If your spouse is not
Statement of Additional Information Page 41
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GT GLOBAL THEME FUNDS
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 plans
("SEPs" or "SEP-IRAs") and salary-reduction SEPs provide self-employed
individuals (and any eligible employees) with benefits similar to Keogh-type
plans or Code Section 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 CODE SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Code Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
GT 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.
From time to time, the Funds and GT Global will quote certain data regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including, but
not limited to, the economic and financial data of such financial organizations
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, GT Guide
to World Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World.
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, industry or market: International Finance
Corporation, GT Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL THEME FUNDS
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management, Inc.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset Management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE GT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the GT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee, which sets broad guidelines for asset
allocation and currency management, based on LGT Asset Management'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.
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. GT 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 GT 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
Statement of Additional Information Page 43
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GT GLOBAL THEME FUNDS
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or GT
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
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Health Care Fund and LGT Asset Management 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). LGT Asset Management
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 LGT Asset
Management, 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.
LGT Asset Management believes that the anticipated increase in the world's
elderly population could increase demand for health care products and services.
For example, according to data compiled by LGT Asset Management, 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. From time to time, the Fund and GT Global will
quote information including, but not limited to, international data regarding
populations, birth rates, mortality rates, life expectancy, health care
expenditures, and gross domestic product vs. life expectancy. The information
quoted has not been independently verified by the Fund or GT Global and will be
based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, 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
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization of telecommunications companies
The information quoted has not been independently verified by the Fund or GT
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
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.
LGT Asset Management expects this scenario to continue to benefit such companies
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL THEME FUNDS
in the U.S. and similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and GT 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
/ / Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or GT
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
INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
FINANCIAL SERVICES FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
NATURAL RESOURCES
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 45
<PAGE>
GT 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 ("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 46
<PAGE>
GT 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 there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment 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
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 judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the 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 47
<PAGE>
GT 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 each Theme Fund (except Consumer Products
and Services Fund) at October 31, 1995, and for the year then ended, and the
audited financial statements of Consumer Products and Services Fund for the
period December 30, 1994 (commencement of operations) to October 31, 1995,
appear on the following pages.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Financial Services Fund 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, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year then ended and 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 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, 1995 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 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 Financial Services Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and 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 15, 1995
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Financial Services Portfolio
(cost $9,002,833) (Note 1)....................... $ 9,793,244
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 508,326
Unamortized organizational costs (Note 1)......... 45,222
Receivable for Fund shares sold................... 14,613
-----------
Total assets.................................... 10,361,405
-----------
Liabilities:
Payable for professional fees..................... 25,862
Payable for printing and postage expenses......... 23,965
Payable for administration fees (Note 2).......... 18,755
Payable for registration and filing fees.......... 7,768
Payable for service and distribution expenses
(Note 2)......................................... 6,302
Payable for transfer agent fees (Note 2).......... 5,473
Payable for Fund shares repurchased............... 4,661
Payable for Directors' fees and expenses (Note
2)............................................... 672
Payable for fund accounting fees (Note 2)......... 229
Other accrued expenses............................ 1,933
-----------
Total liabilities............................... 95,620
-----------
Net assets.......................................... $10,265,785
-----------
-----------
Class A:
Net asset value and redemption price per share
($5,687,073 DIVIDED BY 477,029 shares
outstanding)....................................... $ 11.92
-----------
-----------
Maximum offering price per share (100/95.25 of
$11.92) *.......................................... $ 12.51
-----------
-----------
Class B:+
Net asset value and offering price per share
($4,547,654 DIVIDED BY 384,353 shares
outstanding)....................................... $ 11.83
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($31,058 DIVIDED BY
2,599 shares outstanding).......................... $ 11.95
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $ 9,845,942
Undistributed net investment income............... 86,274
Accumulated net realized loss on investments and
foreign currency transactions.................... (456,842)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Financial Services Portfolio.............. 13,982
Net unrealized appreciation of investments --
Global Financial Services Portfolio.............. 776,429
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $10,265,785
-----------
-----------
<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 50
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income -- Global Financial Services Portfolio.... $ 224,978
Interest income -- Global Financial Services Portfolio.... 60,482
----------
Total investment income................................. 285,460
----------
Expenses:
Expenses -- Global Financial Services Portfolio........... 103,397
Registration and filing fees.............................. 174,700
Printing and postage expenses............................. 133,800
Legal fees................................................ 82,518
Service and distribution expenses: (Note 2)
Class A.................................. $ 20,817
Class B.................................. 33,277 54,094
----------
Audit fees................................................ 52,550
Transfer agent fees (Note 2).............................. 51,593
Administration fees (Note 2).............................. 18,756
Directors' fees and expenses (Note 2)..................... 11,950
Amortization of organization costs (Note 1)............... 12,620
Fund accounting fees (Note 2)............................. 1,930
Other expenses............................................ 4,491
----------
Total expenses before reductions........................ 702,399
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2).............................................. (508,326)
Expense reductions -- Global Financial Services
Portfolio............................................. (1,771)
----------
Total net expenses...................................... 192,302
----------
Net investment income....................................... 93,158
----------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
Financial Services Portfolio.............. (405,844)
Net realized loss on foreign currency
transactions -- Global
Financial Services Portfolio.............. (32,894)
----------
Net realized loss during the year....................... (438,738)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies -- Global Financial
Services Portfolio........................ 13,973
Net change in unrealized appreciation of
investments -- Global
Financial Services Portfolio.............. 743,739
----------
Net unrealized appreciation during the year............. 757,712
----------
Net realized and unrealized gain on investments and foreign
currencies................................................. 318,974
----------
Net increase in net assets resulting from operations........ $ 412,132
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................... $ 93,158 $ 5,694
Net realized loss on investments and
foreign currency transactions -- Global
Financial Services Portfolio.............. (438,738) (32,440)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global Financial
Services Portfolio........................ 13,973 9
Net change in unrealized appreciation of
investments -- Global Financial Services
Portfolio................................. 743,739 32,690
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 412,132 5,953
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 10,643,479 5,652,003
Decrease from capital shares repurchased... (6,199,828) (347,954)
----------------- -----------------
Net increase from capital share
transactions............................ 4,443,651 5,304,049
----------------- -----------------
Total increase in net assets................. 4,855,783 5,310,002
Net assets:
Beginning of period........................ 5,410,002 100,000
----------------- -----------------
End of period.............................. $10,265,785 $5,410,002
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
--------------------------------- --------------------------------- -------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF TO
OCTOBER 31, OPERATIONS) TO OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995(D) OCTOBER 31, 1994 1995(D) OCTOBER 31, 1994 1995
------------ ------------------- ------------ ------------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.62 $ 11.43 $ 11.60 $ 11.43 $ 11.09
------------ ------- ------------ ------- -------------
Income from investment operations:
Net investment income................. 0.17* 0.02* 0.11* 0.00* 0.09*
Net realized and unrealized gain on
investments.......................... 0.13 0.17 0.12 0.17 0.77
------------ ------- ------------ ------- -------------
Net increase from investment
operations......................... 0.30 0.19 0.23 0.17 0.86
------------ ------- ------------ ------- -------------
Net asset value, end of period.......... $ 11.92 $ 11.62 $ 11.83 $ 11.60 $ 11.95
------------ ------- ------------ ------- -------------
------------ ------- ------------ ------- -------------
Total investment return (b)............. 2.58 % 1.66%(c) 1.98 % 1.49%(c) 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,687 $ 3,175 $ 4,548 $ 2,235 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 1.46 % 0.66%(a) 0.96 % 0.16%(a) 1.96%(a)
Without expense reductions and
reimbursement from G.T. Capital...... (5.34)% (7.26)%(a) (5.84)% (7.76)%(a) (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 2.34 % 2.40%(a) 2.84 % 2.90%(a) 1.84%(a)
Without expense reductions and
reimbursement from G.T. Capital...... 9.14 % 10.32%(a) 9.64 % 10.82%(a) 8.64%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Total investment return does not include sales charges.
(c) Not annualized.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income per share would have been reduced by $0.59, $0.59,
$0.30 for Class A, Class B, and Advisor Class, respectively, for the
period ended October 31, 1995, and $0.23 for Class A and Class B from
May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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
$437,824, of which $22,442 expires in 2002 and $415,382 expires in 2003.
(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 initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $63,100. 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
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained $6,892
of such sales charges. G.T. Global also makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $7,543. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $616 to G.T. Capital.
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 55
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
3. CAPITAL SHARES
At October 31, 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
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
---------------------- ---------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 669,827 $ 7,432,400 288,905 $3,352,036
Shares repurchased......................................................... (465,993) (5,162,753) (20,084) (233,975)
--------- ----------- --------- ----------
Net increase............................................................... 203,834 $ 2,269,647 268,821 $3,118,061
--------- ----------- --------- ----------
--------- ----------- --------- ----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
---------------------- ---------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 286,019 $ 3,181,342 198,242 $2,299,967
Shares repurchased......................................................... (94,377) (1,037,075) (9,906) (113,979)
--------- ----------- --------- ----------
Net increase............................................................... 191,642 $ 2,144,267 188,336 $2,185,988
--------- ----------- --------- ----------
--------- ----------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
----------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,599 $ 29,737
Shares repurchased......................................................... -- --
--------- -----------
Net increase............................................................... 2,599 $ 29,737
--------- -----------
--------- -----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.071 per share (representing an approximate total of
$71,998). The total amount of dividend and capital gain taxes paid by the Fund
to such countries was approximately $0.017 per share (representing an
approximate total of $17,755).
Statement of Additional Information Page 56
<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 portfolio of investments, as of
October 31, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets and supplementary data for the year then
ended and 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
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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Financial Services Portfolio as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and
supplementary data for the year then ended and 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 15, 1995
Statement of Additional Information Page 57
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Banks-Regional (24.5%)
Banco Commercial S.A. - 144A ADR{.} -/- {\/} .............. URGY 11,300 $ 189,274 1.9
Unidanmark AS "A" ......................................... DEN 4,000 183,788 1.9
Thai Farmers Bank, Ltd. - Foreign-/- ...................... THAI 21,100 174,435 1.8
Sparbanken Sverige AB "A" ................................. SWDN 15,000 158,287 1.6
Den Danske Bank ........................................... DEN 2,280 151,087 1.5
Bancorp Hawaii, Inc. ...................................... US 4,000 134,000 1.4
First Tennessee National Corp. ............................ US 2,400 128,400 1.3
Cullen/Frost Bankers, Inc. ................................ US 2,500 127,500 1.3
BayBanks, Inc. ............................................ US 1,500 121,500 1.2
Fokus Banken AS-/- ........................................ NOR 23,600 119,975 1.2
Anglo-Irish Bank Corp. PLC ................................ IRE 109,000 110,258 1.1
Bank of Melbourne Ltd. ................................... AUSL 19,800 100,417 1.0
Mellon Bank Corp. ......................................... US 2,000 100,250 1.0
Union Bank Corp. ......................................... US 2,000 100,250 1.0
Espirito Santo Financial Holding S.A. - ADR{\/} .......... LUX 9,000 99,000 1.0
Advance Bank of Australia Ltd. ............................ AUSL 13,000 96,025 1.0
Allied Irish Bank PLC ..................................... IRE 17,500 88,475 0.9
Westpac Banking Corp., Ltd. ............................... AUSL 20,000 82,090 0.8
PT Bank Internasional Indonesia - Foreign ................. INDO 23,000 80,551 0.8
Commerce Bancorp, Inc. .................................... US 3,000 69,375 0.7
Glacier Bancorp, Inc. ..................................... US 550 11,275 0.1
------------
2,426,212
------------
Banks-Money Center (17.2%)
Bank of Ireland ........................................... IRE 36,000 239,378 2.4
Bank Hapoalim Ltd.-/- ..................................... ISRL 133,000 211,494 2.2
HSBC Holdings PLC ......................................... HK 12,000 174,617 1.8
Bangkok Bank Co., Ltd. - Foreign .......................... THAI 14,300 147,774 1.5
National Westminster Bank PLC ............................. UK 14,800 147,602 1.5
Commercial Bank of Korea-/- ............................... KOR 9,900 110,348 1.1
Krung Thai Bank Ltd. - Foreign ............................ THAI 24,750 98,370 1.0
Bank Leumi Le - Israel-/- ................................. ISRL 67,500 92,833 1.0
Sumitomo Bank ............................................. JPN 5,000 88,543 0.9
Mitsubishi Bank ........................................... JPN 4,000 78,270 0.8
Banco O'Higgins - ADR{\/} ................................ CHLE 3,600 76,950 0.8
Fuji Bank Ltd. ............................................ JPN 4,000 74,357 0.8
Dai-Ichi Kangyo Bank Ltd. ................................. JPN 4,000 67,704 0.7
Citicorp .................................................. US 1,000 64,875 0.7
------------
1,673,115
------------
Securities Brokers (12.4%)
Daiwa Securities Co., Ltd. ................................ JPN 14,000 164,368 1.7
Edwards (A.G.), Inc. ...................................... US 5,600 142,800 1.5
Nikko Securities Co., Ltd. ................................ JPN 14,000 130,672 1.3
Nomura Securities Co., Ltd. ............................... JPN 7,000 128,070 1.3
Peregrine Investment Holdings Ltd. ........................ HK 100,000 127,406 1.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 58
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Securities Brokers (Continued)
Dean Witter, Discover & Co. ............................... US 2,500 $ 124,375 1.3
Yamaichi Securities ....................................... JPN 22,000 115,370 1.2
Charles Schwab Corp. ...................................... US 4,600 105,225 1.1
Kankaku Securities Co.-/- ................................. JPN 27,000 87,173 0.9
Hanshin Securities Co. .................................... KOR 3,500 78,225 0.8
------------
1,203,684
------------
Other Financial (10.7%)
U.S. Order, Inc. .......................................... US 13,100 196,500 2.0
Aboitiz Equity Ventures, Inc.-/- .......................... PHIL 730,000 139,088 1.4
Transaction Network Service-/- ............................ US 6,000 138,000 1.4
Acom Co., Ltd. ............................................ JPN 4,000 130,320 1.3
DST Systems, Inc. ......................................... US 5,000 105,000 1.1
Shohkoh Fund .............................................. JPN 600 104,491 1.1
Compagnie Financiere de Paribas S.A. ...................... FR 1,800 99,049 1.0
JACCS Co., Ltd. ........................................... JPN 10,000 91,185 0.9
State Street Boston Corp. ................................. US 1,250 48,594 0.5
------------
1,052,227
------------
Investment Management (8.1%)
Alliance Capital Management L.P. .......................... US 12,200 256,199 2.6
Invesco PLC - ADR{\/} ..................................... UK 6,000 229,499 2.3
Franklin Resources, Inc. .................................. US 2,000 101,500 1.0
Invesco PLC-/- ............................................ UK 23,300 89,488 0.9
M & G Group PLC ........................................... UK 3,500 72,191 0.7
Eaton Vance Corp. ........................................ US 1,600 58,400 0.6
------------
807,277
------------
Consumer Finance (5.2%)
First Financial Caribbean Corp. ........................... US 10,000 178,124 1.8
Nichiei Co., Ltd. ........................................ JPN 2,000 124,254 1.3
Promise Co., Ltd. ......................................... JPN 3,000 118,286 1.2
Green Tree Financial Corp. ................................ US 3,400 90,525 0.9
------------
511,189
------------
Insurance - Multi-Line (4.6%)
Corporacion Mapfre ........................................ SPN 4,000 205,068 2.1
Allmerica Financial Corp. ................................. US 5,000 125,625 1.3
Axa Group ................................................. FR 2,036 113,118 1.2
------------
443,811
------------
Insurance - Property-Casualty (3.6%)
RenaissanceRe Holdings Ltd. ............................... US 4,000 108,500 1.1
Mid Ocean Ltd. ............................................ US 2,700 95,513 1.0
MBIA, Inc. ................................................ US 1,200 83,550 0.9
AMBAC, Inc. .............................................. US 1,300 54,763 0.6
------------
342,326
------------
Real Estate Investment Trust (2.8%)
Alexander Haagen Properties, Inc. ......................... US 8,900 97,900 1.0
Beacon Properties Corp. ................................... US 4,300 93,525 1.0
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 59
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Real Estate Investment Trust (Continued)
Evans Withycombe Residential, Inc. ........................ US 4,000 $ 75,500 0.8
------------
266,925
------------
Savings & Loans (2.0%)
Leader Financial Corp. .................................... US 3,000 106,875 1.1
Long Island Bancorp, Inc. ................................. US 3,800 86,925 0.9
------------
193,800
------------
Banks-Super Regional (1.6%)
NationsBank Corp. ......................................... US 1,500 98,625 1.0
BankAmerica Corp. ......................................... US 1,000 57,500 0.6
------------
156,125
------------
Insurance-Life (0.9%)
Mapfre Vida Seguros ....................................... SPN 1,700 89,943 0.9
------------ -----
TOTAL EQUITY INVESTMENTS (cost $8,390,205) ................. 9,166,634 93.6
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $860,000 U.S. Treasury Strips due
2/15/02 (market value of collateral is $595,179, including
accrued interest). (cost $575,093) ...................... 575,093 5.9
------------ -----
TOTAL INVESTMENTS (cost $8,965,298) ......................... 9,741,727 99.5
Other Assets and Liabilities ................................ 51,617 0.5
------------ -----
NET ASSETS .................................................. $ 9,793,344 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $9,793,344.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} 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.
* For Federal income tax purposes, cost is $8,976,777 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 969,371
Unrealized depreciation: (204,421)
-------------
Net unrealized appreciation: $ 764,950
-------------
-------------
</TABLE>
Abbreviation:
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 60
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 2.8 2.8
Chile (CHLE/CLP) ..................... 0.8 0.8
Denmark (DEN/DKK) .................... 3.4 3.4
France (FR/FRF) ...................... 2.2 2.2
Hong Kong (HK/HKD) ................... 3.1 3.1
Indonesia (INDO/IDR) ................. 0.8 0.8
Ireland (IRE/IEP) .................... 4.4 4.4
Israel (ISRL/ILS) .................... 3.2 3.2
Japan (JPN/JPY) ...................... 15.4 15.4
Korea (KOR/KRW) ...................... 1.9 1.9
Luxembourg (LUX/ECU) ................. 1.0 1.0
Norway (NOR/NOK) ..................... 1.2 1.2
Philippines (PHIL/PHP) ............... 1.4 1.4
Spain (SPN/ESP) ...................... 3.0 3.0
Sweden (SWDN/SEK) .................... 1.6 1.6
Thailand (THAI/THB) .................. 4.3 4.3
United Kingdom (UK/GBP) .............. 5.4 5.4
United States (US/USD) ............... 35.8 6.4 42.2
Uruguay (URGY/UYP) ................... 1.9 1.9
------ --- -----
Total ............................... 93.6 6.4 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $9,793,344.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell Dollars) Price Date Appreciation
- ------------------------------------------------------------------------------- ------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Japanese Yen................................................................... 466,686 99.83000 11/14/95 $ 11,126
------------- ------------
Total Contracts to Sell (Receivable amount $477,812)........................... 466,686 $ 11,126
------------- ------------
</TABLE>
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 4.77%
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 61
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$8,965,298) (Note 1)............................. $ 9,741,727
Foreign currencies (cost $524).................... 524
Receivable for securities sold.................... 767,833
Dividends and dividend withholding tax reclaims
receivable....................................... 13,818
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 11,126
Interest receivable............................... 20
Cash held as collateral for securities loaned
(Note 1)......................................... 223,830
-----------
Total assets.................................... 10,758,878
-----------
Liabilities:
Payable for securities purchased.................. 667,221
Payable for investment management and
administration fees (Note 2)..................... 51,353
Payable for professional fees..................... 7,214
Payable for printing and postage expenses......... 4,007
Payable for custodian fees (Note 1)............... 2,943
Payable for Trustees' fees and expenses (Note
2)............................................... 2,849
Other accrued expenses............................ 6,117
Collateral for securities loaned (Note 1)......... 223,830
-----------
Total liabilities............................... 965,534
-----------
Net assets.......................................... $ 9,793,344
-----------
-----------
Net assets consist of:
Paid in capital................................... $ 9,303,972
Accumulated net investment income................. 170,139
Accumulated net realized loss on investments and
foreign currency transactions.................... (471,178)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 13,982
Net unrealized appreciation of investments........ 776,429
-----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $ 9,793,344
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 62
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$10,038)................................................. $ 224,978
Interest income........................................... 60,482
----------
Total investment income................................. 285,460
----------
Expenses:
Investment management and administration fees (Note 2).... 51,353
Custodian fees (Note 1)................................... 25,175
Legal fees................................................ 12,300
Trustees' fees and expenses (Note 2)...................... 7,119
Audit fees................................................ 5,550
Other expenses............................................ 1,900
----------
Total expenses before reductions........................ 103,397
----------
Expense reductions (Note 1 & 4)....................... (1,771)
----------
Total net expenses...................................... 101,626
----------
Net investment income....................................... 183,834
----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $ (405,844)
Net realized loss on foreign currency
transactions.............................. (32,894)
----------
Net realized loss during the year....................... (438,738)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 13,973
Net change in unrealized appreciation of
investments............................... 743,739
----------
Net unrealized appreciation during the year............. 757,712
----------
Net realized and unrealized gain on investments and foreign
currencies................................................. 318,974
----------
Net increase in net assets resulting from operations........ $ 502,808
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 63
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)............... $ 183,834 $ (13,695)
Net realized loss on investments and
foreign currency transactions............. (438,738) (32,440)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 13,973 9
Net change in unrealized appreciation of
investments............................... 743,739 32,690
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 502,808 (13,436)
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 9,881,645 5,089,171
Withdrawals................................ (5,766,944) --
----------------- -----------------
Net increase from beneficial interest
transactions............................ 4,114,701 5,089,171
----------------- -----------------
Total increase in net assets................. 4,617,509 5,075,735
Net assets:
Beginning of period........................ 5,175,835 100,100
----------------- -----------------
End of period.............................. $ 9,793,344 $5,175,835
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 64
<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>
YEAR
ENDED MAY 31, 1994
OCTOBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO OCTOBER 31, 1994
------------ ------------------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 9,793 $ 5,176
Ratio of net investment income to
average net assets..................... 2.60 % 1.19 %(a)
Ratio of operating expenses to average
net assets:
With expense reductions............... 1.43 % 4.43 %(a)
Without expense reductions............ 1.46 % -- %*
Portfolio turnover rate................. 170 % 53 %
</TABLE>
- ----------------
(a) Annualized
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 65
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 of
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 year end, resulting from
changes in exchange rates.
(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 Contract") is an agreement between
two parties to buy
Statement of Additional Information Page 66
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
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 amounts 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 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-
Statement of Additional Information Page 67
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
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
At October 31, 1995, stocks with an aggregate value of approximately $204,255
were on loan to brokers. The loans were secured by cash collateral of $223,830.
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 year ended October 31, 1995, the Portfolio received $201 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) 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 prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Portfolio may focus its investments in certain related
financial 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 October 31, 1995, 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 year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$14,536,797 and $10,774,813, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $1,570 under these arrangements.
Statement of Additional Information Page 68
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Infrastructure Fund 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, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year then ended and 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 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, 1995 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 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 Infrastructure Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and 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 15, 1995
Statement of Additional Information Page 69
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Infrastructure Portfolio
(cost $85,307,015) (Note 1)...................... $86,009,828
Receivable for Fund shares sold................... 1,226,018
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 177,376
Unamortized organizational costs (Note 1)......... 36,908
Prepaid expenses.................................. 5,852
-----------
Total assets.................................... 87,455,982
-----------
Liabilities:
Payable for Fund shares repurchased............... 447,839
Payable for administration fees (Note 2).......... 192,675
Payable for service and distribution expenses
(Note 2)......................................... 59,114
Payable for printing and postage expenses......... 38,172
Payable for transfer agent fees (Note 2).......... 37,090
Payable for professional fees..................... 24,211
Payable for registration and filing fees.......... 10,118
Payable for Directors' fees and expenses (Note
2)............................................... 4,772
Payable for fund accounting fees (Note 2)......... 1,881
Other accrued expenses............................ 1,628
-----------
Total liabilities............................... 817,500
-----------
Net assets.......................................... $86,638,482
-----------
-----------
Class A:
Net asset value and redemption price per share
($36,240,755 DIVIDED BY 2,991,734 shares
outstanding)....................................... $ 12.11
-----------
-----------
Maximum offering price per share (100/95.25 of
$12.11) *.......................................... $ 12.71
-----------
-----------
Class B:+
Net asset value and offering price per share
($50,181,400 DIVIDED BY 4,171,435 shares
outstanding)....................................... $ 12.03
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($216,327 DIVIDED BY
17,819 shares outstanding) ........................ $ 12.14
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $86,254,529
Accumulated net realized loss on investments and
foreign currency transactions.................... (318,860)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Infrastructure Portfolio.................. 158,380
Net unrealized appreciation of investments --
Global Infrastructure Portfolio.................. 544,433
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $86,638,482
-----------
-----------
<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>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income -- Global Infrastructure Portfolio......... $1,008,999
Interest income -- Global Infrastructure Portfolio......... 692,904
----------
Total investment income.................................. 1,701,903
----------
Expenses:
Expenses -- Global Infrastructure Portfolio................ 727,172
Service and distribution expenses: (Note 2)
Class A.................................. $ 180,627
Class B.................................. 473,441 654,068
-----------
Transfer agent fees (Note 2)............................... 383,369
Administration fees (Note 2)............................... 208,892
Registration and filing fees............................... 144,100
Printing and postage expenses.............................. 144,036
Legal fees................................................. 73,120
Audit fees................................................. 47,550
Directors' fees and expenses (Note 2)...................... 15,950
Fund accounting fees (Note 2).............................. 15,599
Amortization of organization costs (Note 1)................ 10,300
----------
Total expenses before reductions......................... 2,424,156
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................... (177,376)
Expense reductions -- Global Infrastructure
Portfolio.............................................. (37,549)
----------
Total net expenses....................................... 2,209,231
----------
Net investment loss.......................................... (507,328)
----------
Net realized and unrealized loss on
investments and foreign currencies:
Net realized gain on investments -- Global
Infrastructure Portfolio.................. 1,032,988
Net realized loss on foreign currency
transactions -- Global Infrastructure
Portfolio................................. (1,091,351)
-----------
Net realized loss during the year........................ (58,363)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global
Infrastructure Portfolio.................. 157,236
Net change in unrealized appreciation of
investments -- Global Infrastructure
Portfolio................................. (565,235)
-----------
Net unrealized depreciation during the year.............. (407,999)
----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (466,362)
----------
Net decrease in net assets resulting from operations......... $ (973,690)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 71
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)............... $ (507,328) $ 13,178
Net realized loss on investments and
foreign currency transactions -- Global
Infrastructure Portfolio.................. (58,363) (49,221)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies -- Global
Infrastructure Portfolio.................. 157,236 1,144
Net change in unrealized appreciation of
investments -- Global Infrastructure
Portfolio................................. (565,235) 1,109,668
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (973,690) 1,074,769
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 69,579,771 55,939,368
Decrease from capital shares repurchased... (36,537,085) (2,544,651)
----------------- -----------------
Net increase from capital share
transactions............................ 33,042,686 53,394,717
----------------- -----------------
Total increase in net assets................. 32,068,996 54,469,486
Net assets:
Beginning of period........................ 54,569,486 100,000
----------------- -----------------
End of period.............................. $ 86,638,482 $54,569,486
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 72
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
------------------------------- ------------------------------- -------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF TO
OCTOBER 31, OPERATIONS) TO OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995 OCTOBER 31, 1994 1995 OCTOBER 31, 1994 1995
----------- ------------------ ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 11.43 $ 12.45 $ 11.43 $ 12.00
----------- -------- ----------- -------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03)* 0.01* (0.09)* (0.01)* 0.02*
Net realized and unrealized gain
(loss) on investments................ (0.33) 1.03 (0.33) 1.03 0.12
----------- -------- ----------- -------- -------------
Net increase (decrease) from
investment operations.............. (0.36) 1.04 (0.42) 1.02 0.14
----------- -------- ----------- -------- -------------
Net asset value, end of period.......... $ 12.11 $ 12.47 $ 12.03 $ 12.45 $ 12.14
----------- -------- ----------- -------- -------------
----------- -------- ----------- -------- -------------
Total investment return (c)............. (2.89)% 9.10 %(b) (3.37)% 8.92 %(b) 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 36,241 $ 23,615 $ 50,181 $ 30,954 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... (0.32)% 0.41 %(a) (0.82)% (0.09)%(a) 0.18%(a)
Without expense reductions and
reimbursement by G.T. Capital........ (0.58)% (0.47)%(a) (1.08)% (0.97)%(a) (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 2.36% 2.40 %(a) 2.86% 2.90 %(a) 1.86%(a)
Without expense reductions and
reimbursement by G.T. Capital........ 2.62% 3.28 %(a) 3.12% 3.78 %(a) 2.12%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income per share would have been reduced by $0.03 for Class
A shares, $0.03 for Class B shares, and $0.02 for Advisor Class shares
for the period ended October 31, 1995. Net investment income per share
would have been reduced by $0.02 for Class A and Class B from May 31,
1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 73
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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 initial
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, Class B, and
Advisor Class shares for purchase.
Statement of Additional Information Page 74
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
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, 1995, G.T. Global retained
$67,021 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $193,268. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $5,836 to G.T. Capital.
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>
GT GLOBAL INFRASTRUCTURE FUND
3. CAPITAL SHARES
At October 31, 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 Financial
Services Fund; and 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
------------------------ ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,997,022 $ 35,715,669 2,020,133 $24,648,202
Shares repurchased......................................................... (1,898,557) (23,075,894) (131,239) (1,614,053)
---------- ------------ --------- -----------
Net increase............................................................... 1,098,465 $ 12,639,775 1,888,894 $23,034,149
---------- ------------ --------- -----------
---------- ------------ --------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
------------------------ ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,815,712 $ 33,606,616 2,557,551 $31,291,166
Shares repurchased......................................................... (1,130,463) (13,421,180) (75,739) (930,598)
---------- ------------ --------- -----------
Net increase............................................................... 1,685,249 $ 20,185,436 2,481,812 $30,360,568
---------- ------------ --------- -----------
---------- ------------ --------- -----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
------------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 21,018 $ 257,486
Shares repurchased......................................................... (3,199) (40,011)
---------- ------------
Net increase............................................................... 17,819 $ 217,475
---------- ------------
---------- ------------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 76
<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 portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets and the supplementary data for the year then
ended and 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
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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Infrastructure Portfolio as of October 31, 1995, the results of its operations
for the year then ended, the changes in its net assets and the supplementary
data for the year then ended and 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 15, 1995
Statement of Additional Information Page 77
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (27.3%)
Consolidated Electric Power Asia .......................... HK 1,400,000 $ 2,833,971 3.3
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp.: ............................... KOR -- -- 2.8
ELECTRICAL & GAS UTILITIES
ADR-/- {\/} ............................................. -- 58,000 1,435,500 --
Common-/- ............................................... -- 21,000 938,083 --
ASEA AB "B" Free ......................................... SWDN 22,000 2,172,307 2.5
ELECTRICAL PLANT/EQUIPMENT
Enron Global Power & Pipelines L.L.C. ..................... US 90,000 2,171,250 2.5
ENERGY EQUIPMENT & SERVICES
Empresa Nacional de Electridad S.A. - ADR{\/} ............. SPN 40,000 2,010,000 2.3
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{\/} ............... BOL 62,300 1,814,488 2.1
ELECTRICAL & GAS UTILITIES
Edison S.p.A. ............................................. ITLY 450,000 1,811,527 2.1
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} .................................. CHLE 75,000 1,800,000 2.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR-/- {\/
} ....................................................... BRZL 81,175 1,735,116 2.0
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ............... ASTRI 14,000 1,711,284 2.0
ELECTRICAL & GAS UTILITIES
Capex S.A. ................................................ ARG 260,000 1,677,000 2.0
ELECTRICAL & GAS UTILITIES
MetroGas S.A. - ADR{\/} ................................... ARG 100,000 850,000 1.0
ENERGY EQUIPMENT & SERVICES
AES China Generating Co., Ltd. "A"-/- ..................... US 54,100 541,000 0.6
ELECTRICAL & GAS UTILITIES
------------
23,501,526
------------
Services (20.7%)
ABC Rail Products Corp.-/- ................................ US 115,100 2,560,975 3.0
TRANSPORTATION - ROAD & RAIL
DDI Corp. ................................................. JPN 295 2,392,672 2.8
WIRELESS COMMUNICATIONS
Telefonica de Espana - ADR{\/} ............................ SPN 55,000 2,069,375 2.4
TELEPHONE NETWORKS
SPT Telecom-/- ........................................... CZCH 19,000 1,871,295 2.2
TELEPHONE NETWORKS
WorldCom, Inc.-/- ......................................... US 55,832 1,821,519 2.1
TELEPHONE - LONG DISTANCE
Stet Di Risp .............................................. ITLY 810,000 1,768,188 2.1
TELEPHONE NETWORKS
PT Indonesia Satellite (Indosat) - ADR{\/} ................ INDO 50,000 1,656,250 1.9
TELEPHONE - LONG DISTANCE
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 20,000 1,122,500 1.3
TELEPHONE NETWORKS
Centennial Cellular Corp. "A"-/- .......................... US 60,000 1,095,000 1.3
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 78
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Pakistan Telecommunications Co., Ltd.: .................... PAK -- -- 0.8
TELEPHONE NETWORKS
144A GDR{.} -/- {\/} ................................... -- 4,892 $ 457,402 --
New Voucher-/- {\/} ..................................... -- 2,800 273,324 --
RailTex, Inc.-/- .......................................... US 22,200 460,650 0.5
TRANSPORTATION - ROAD & RAIL
PST Vans, Inc.-/- ......................................... US 47,500 267,188 0.3
TRANSPORTATION - ROAD & RAIL
Telecomunicacoes Brasileiras S.A. (Telebras) - 144A ADR{.}
{\/ } ................................................... BRZL 113 4,506 --
TELEPHONE NETWORKS
------------
17,820,844
------------
Capital Goods (20.7%)
Nokia AB Preferred - ADR{\/} .............................. FIN 51,000 2,843,250 3.3
TELECOM EQUIPMENT
Mannesmann AG ............................................. GER 7,500 2,469,090 2.9
MACHINERY & ENGINEERING
Caterpillar, Inc. ......................................... US 40,000 2,245,000 2.6
MACHINERY & ENGINEERING
Fluor Corp. ............................................... US 35,000 1,977,500 2.3
CONSTRUCTION
United Engineers Ltd. .................................... MAL 270,000 1,679,197 2.0
CONSTRUCTION
Allgon AB "B" Free ........................................ SWDN 100,000 1,515,037 1.8
TELECOM EQUIPMENT
Acme-Cleveland Corp. ..................................... US 63,300 1,384,688 1.6
MACHINE TOOLS
E.R.G. Ltd. .............................................. AUSL 1,100,000 1,331,861 1.5
MULTI-INDUSTRY
BroadBand Technologies, Inc.-/- ........................... US 70,100 1,226,750 1.4
TELECOM EQUIPMENT
C & P Homes, Inc.-/- ...................................... PHIL 998,200 643,566 0.7
CONSTRUCTION
Champion Technology Holdings .............................. HK 3,878,622 496,668 0.6
TELECOM EQUIPMENT
------------
17,812,607
------------
Materials/Basic Industry (15.0%)
La Cementos Nacional, C.A. - 144A GDR{.} -/- {\/} ......... ECDR 12,060 2,412,000 2.8
CEMENT
PT Bakrie and Brothers .................................... INDO 1,170,000 2,061,674 2.4
BUILDING MATERIALS & COMPONENTS
Lone Star Industries, Inc. ................................ US 75,000 1,715,625 2.0
CEMENT
Giant Cement Holding, Inc.-/- ............................. US 179,800 1,685,625 2.0
CEMENT
Siam Cement Co., Ltd. - Foreign ........................... THAI 28,000 1,526,868 1.8
CEMENT
Hylsamex, S.A. de C.V. - 144A ADR{.} -/- {\/} ............. MEX 75,000 1,265,625 1.5
METALS - STEEL
Cementos Paz del Rio S.A. - 144A ADR{.} -/- {\/} .......... COL 65,000 926,250 1.1
CEMENT
PT Semen Cibinong - Foreign ............................... INDO 316,000 828,282 1.0
CEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 79
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Grupo Simec, S.A. de C.V. - ADR-/- {\/} ................... MEX 54,200 $ 352,300 0.4
METALS - STEEL
------------
12,774,249
------------
Technology (9.3%)
DSP Communications, Inc. .................................. US 110,000 3,987,500 4.6
TELECOM TECHNOLOGY
LG Information & Communication-/- ......................... KOR 30,400 2,423,735 2.8
TELECOM TECHNOLOGY
Three-Five Systems, Inc.-/- .............................. US 90,000 1,631,249 1.9
TELECOM TECHNOLOGY
------------
8,042,484
------------
Miscellaneous (2.2%)
General Electric Co. ...................................... US 30,000 1,897,500 2.2
CONGLOMERATE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $81,114,777) ................. 81,849,210 95.2
------------ -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.9%)
Philippines (0.9%)
International Container Terminal Services, Convertible
Bond,5% due 9/15/01 - 144A (cost $1,000,000){.} ....... USD 1,000,000 810,000 0.9
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $3,235,000 U.S. Treasury Bill, due
2/8/96 (market value of collateral is $3,187,283,
including accrued interest) (cost $3,116,502). .......... 3,116,502 3.6
------------ -----
TOTAL INVESTMENTS (cost $85,231,279) ........................ 85,775,712 99.7
Other Assets and Liabilities ................................ 234,216 0.3
------------ -----
NET ASSETS .................................................. $ 86,009,928 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $86,009,928.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} 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.
* For Federal income tax purposes, cost is $85,381,279 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 8,629,590
Unrealized depreciation: (8,235,157)
-------------
Net unrealized appreciation: $ 394,433
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 80
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Short-Term
Country(Country Code/Currency Code) Equity Fixed Income & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 3.0 3.0
Australia (AUSL/AUD) ................. 1.5 1.5
Austria (ASTRI/ATS) .................. 2.0 2.0
Bolivia (BOL/BOL) .................... 2.1 2.1
Brazil (BRZL/BRL) .................... 2.0 2.0
Chile (CHLE/CLP) ..................... 2.1 2.1
Colombia (COL/COP) ................... 1.1 1.1
Czech Republic (CZCH/CSK) ........... 2.2 2.2
Ecuador (ECDR/ECS) .................. 2.8 2.8
Finland (FIN/FIM) .................... 3.3 3.3
Germany (GER/DEM) .................... 2.9 2.9
Hong Kong (HK/HKD) ................... 3.9 3.9
Indonesia (INDO/IDR) ................. 5.3 5.3
Italy (ITLY/ITL) ..................... 4.2 4.2
Japan (JPN/JPY) ...................... 2.8 2.8
Korea (KOR/KRW) ...................... 5.6 5.6
Malaysia (MAL/MYR) ................... 2.0 2.0
Mexico (MEX/MXN) ..................... 1.9 1.9
Pakistan (PAK/PKR) .................. 0.8 0.8
Philippines (PHIL/PHP) ............... 2.0 0.9 2.9
Spain (SPN/ESP) ...................... 4.7 4.7
Sweden (SWDN/SEK) .................... 4.3 4.3
Thailand (THAI/THB) .................. 1.8 1.8
United States (US/USD) ............... 30.9 3.9 34.8
------ --- --- -----
Total ............................... 95.2 0.9 3.9 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $86,009,928.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Delivery Appreciation
Contracts to Buy Dollars) Contract Price Date (Depreciation)
- ------------------------------------------------------------------------- ------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks........................................................... 852,697 1.42871 11/03/95 $ 10,987
Japanese Yen............................................................. 215,243 100.01800 11/14/95 (4,717)
Japanese Yen............................................................. 25,438 97.97301 11/14/95 (1,100)
------------- -------------
Total Contracts to Buy (Payable amount $1,088,208)....................... 1,093,378 5,170
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 1.27%
Contracts to Sell
- -------------------------------------------------------------------------
Deutsche Marks........................................................... 1,811,980 1.37700 11/03/95 39,872
Deutsche Marks........................................................... 177,898 1.45648 11/30/95 (6,251)
Italian Lira............................................................. 1,341,741 1,605.60000 11/16/95 (10,500)
Japanese Yen............................................................. 978,378 91.70000 11/14/95 112,135
Japanese Yen............................................................. 303,297 96.50400 11/14/95 17,933
------------- -------------
Total Contracts to Sell (Receivable amount $4,766,483)................... 4,613,294 153,189
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 5.36%
Total Open Forward Foreign currency Contracts, Net....................... $ 158,359
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 81
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $85,231,279)
(Note 1)............................................... $85,775,712
U.S. currency.............................. $ 499 --
Foreign currencies (cost $472,653)......... 472,692 473,191
--------
Receivable for open forward foreign currency contracts,
net (Note 1)........................................... 158,359
Dividends and dividend withholding tax reclaims
receivable............................................. 119,634
Receivable for forward foreign currency contracts --
closed (Note 1)........................................ 15,177
Interest receivable..................................... 6,389
Prepaid expenses........................................ 234
Cash held as collateral for securities loaned (Note
1)..................................................... 7,441,675
-----------
Total assets.......................................... 93,990,371
-----------
Liabilities:
Payable for investment management and administration
fees (Note 2).......................................... 505,838
Payable for professional fees........................... 14,114
Payable for custodian fees (Note 1)..................... 6,534
Payable for printing and postage expenses............... 4,250
Payable for Trustees' fees and expenses (Note 2)........ 3,992
Other accrued expenses.................................. 4,040
Collateral for securities loaned (Note 1)............... 7,441,675
-----------
Total liabilities..................................... 7,980,443
-----------
Net assets................................................ $86,009,928
-----------
-----------
Net assets consist of:
Paid in capital......................................... $84,277,905
Accumulated net investment income....................... 1,136,794
Accumulated net realized loss on investments and foreign
currency transactions.................................. (107,584)
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies...................... 158,380
Net unrealized appreciation of investments.............. 544,433
-----------
Total -- representing net assets applicable to shares of
beneficial interest outstanding.......................... $86,009,928
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$90,378).................................................. $1,008,999
Interest income............................................ 692,904
----------
Total investment income.................................. 1,701,903
----------
Expenses:
Investment management and administration fees (Note 2)..... 601,421
Custodian fees (Note 1).................................... 80,701
Legal fees................................................. 18,300
Audit fees................................................. 11,550
Trustees' fees and expenses (Note 2)....................... 7,300
Printing and postage expenses.............................. 4,250
Other expenses............................................. 3,650
----------
Total expenses before reductions......................... 727,172
----------
Expense reductions (Notes 1 & 4)....................... (37,549)
----------
Total net expenses....................................... 689,623
----------
Net investment income........................................ 1,012,280
----------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... $ 1,032,988
Net realized loss on foreign currency
transactions.............................. (1,091,351)
-----------
Net realized loss during the year........................ (58,363)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies..................... 157,236
Net change in unrealized appreciation of
investments............................... (565,235)
-----------
Net unrealized depreciation during the year.............. (407,999)
----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (466,362)
----------
Net increase in net assets resulting from operations......... $ 545,918
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................... $ 1,012,280 $ 124,514
Net realized loss on investments and
foreign currency transactions............. (58,363) (49,221)
Net change in unrealized appreciation on
translation of assets and
liabilities in foreign currencies......... 157,236 1,144
Net change in unrealized appreciation of
investments............................... (565,235) 1,109,668
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 545,918 1,186,105
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 62,352,320 52,494,964
Withdrawals................................ (27,995,100) (2,674,379)
----------------- -----------------
Net increase from beneficial interest
transactions............................ 34,357,220 49,820,585
----------------- -----------------
Total increase in net assets................. 34,903,138 51,006,690
Net assets:
Beginning of period........................ 51,106,790 100,100
----------------- -----------------
End of period.............................. $ 86,009,928 $51,106,790
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<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
YEAR ENDED (COMMENCEMENT OF
OCTOBER 31, OPERATIONS) TO
1995 OCTOBER 31, 1994
----------- ------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 86,010 $ 51,107
Ratio of net investment income to
average net assets..................... 1.22% 1.44 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 0.83% 1.17 %(a)
Without expense reductions............ 0.88% -- % *
Portfolio turnover rate................. 45% 18 %
</TABLE>
- ----------------
(a) Annualized.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 85
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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, on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 of
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 year end, resulting from
changes in exchange rates.
(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.
Statement of Additional Information Page 86
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the 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 amounts 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 hold 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 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 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
Statement of Additional Information Page 87
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
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
At October 31, 1995, stocks with an aggregate value of approximately $7,127,333
were on loan to brokers. The loans were secured by cash collateral of
$7,441,675. 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 year ended October 31, 1995, the Portfolio received $29,528 of income from
securities lending which were used to reduce the Portfolio's custodian fees.
(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
infrastructure 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 October 31, 1995, 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 year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$66,417,748 and $32,256,613, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $8,021 under these arrangements.
Statement of Additional Information Page 88
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Natural Resources Fund 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, 1995, related statement of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for the year then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 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 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 Natural Resources Fund as of October 31, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended and 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 15, 1995
Statement of Additional Information Page 89
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Natural Resources Portfolio
(cost $25,952,266) (Note 1)...................... $26,759,884
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 319,110
Unamortized organizational costs (Note 1)......... 36,854
Receivable for Fund shares sold................... 33,663
-----------
Total assets.................................... 27,149,511
-----------
Liabilities:
Payable for Fund shares repurchased............... 302,940
Payable for administration fees (Note 2).......... 74,485
Payable for printing and postage expenses......... 32,910
Payable for professional fees..................... 25,278
Payable for service and distribution expenses
(Note 2)......................................... 18,237
Payable for registration and filing fees.......... 12,148
Payable for transfer agent fees (Note 2).......... 8,635
Payable for Directors' fees and expenses (Note
2)............................................... 752
Payable for fund accounting fees (Note 2)......... 610
Other accrued expenses............................ 2,298
-----------
Total liabilities............................... 478,293
-----------
Net assets.......................................... $26,671,218
-----------
-----------
Class A:
Net asset value and redemption price per share
($12,597,970 DIVIDED BY 1,101,106 shares
outstanding)....................................... $ 11.44
-----------
-----------
Maximum offering price per share (100/95.25 of
$11.44) *.......................................... $ 12.01
-----------
-----------
Class B:+
Net asset value and offering price per share
($13,978,465 DIVIDED BY 1,230,103 shares
outstanding)....................................... $ 11.36
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($94,783 DIVIDED BY
8,267 shares outstanding).......................... $ 11.47
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $28,316,783
Undistributed net investment income............... 47,438
Accumulated net realized loss on investments and
foreign currency transactions.................... (2,500,621)
Net unrealized depreciation on translation of
assets and liabilities in foreign
currencies -- Global Natural Resources
Portfolio........................................ (48,503)
Net unrealized appreciation of investments --
Global Natural Resources Portfolio............... 856,121
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $26,671,218
-----------
-----------
<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 90
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Natural Resources Portfolio...... $ 437,615
Dividend income -- Global Natural Resources Portfolio...... 392,475
-----------
Total investment income.................................. 830,090
-----------
Expenses:
Expenses -- Global Natural Resources Portfolio............. 284,129
Service and distribution expenses: (Note 2)
Class A.................................. $ 73,794
Class B.................................. 149,950 223,744
-----------
Transfer agent fees (Note 2)............................... 141,492
Registration and filing fees............................... 136,100
Printing and postage expenses.............................. 120,650
Administration fees (Note 2)............................... 74,485
Audit fees................................................. 53,750
Legal fees................................................. 44,782
Directors' fees and expenses (Note 2)...................... 12,450
Amortization of organization costs (Note 1)................ 10,300
Fund accounting fees (Note 2).............................. 7,619
Other expenses............................................. 1,251
-----------
Total expenses before reductions......................... 1,110,752
-----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................... (319,110)
Expense reductions -- Global Natural Resources
Portfolio.............................................. (9,670)
-----------
Total net expenses....................................... 781,972
-----------
Net investment income........................................ 48,118
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
Natural Resources Portfolio............... (2,302,171)
Net realized loss on foreign currency
transactions -- Global Natural Resources
Portfolio................................. (89,256)
-----------
Net realized loss during the year........................ (2,391,427)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies -- Global Natural
Resources Portfolio....................... (43,764)
Net change in unrealized appreciation of
investments -- Global Natural Resources
Portfolio................................. 177,530
-----------
Net unrealized appreciation during the year.............. 133,766
-----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (2,257,661)
-----------
Net decrease in net assets resulting from operations......... $(2,209,543)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 91
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 48,118 $ 106,264
Net realized loss on investments and
foreign currency transactions -- Global
Natural Resources Portfolio............... (2,391,427) (130,259)
Net change in unrealized depreciation on
translation of assets and
liabilities in foreign currencies --
Global Natural Resources Portfolio........ (43,764) (4,739)
Net change in unrealized appreciation of
investments -- Global Natural
Resources Portfolio....................... 177,530 678,591
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (2,209,543) 649,857
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (36,529) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (30,368) --
----------------- -----------------
Total distributions...................... (66,897) --
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 38,611,615 34,666,146
Decrease from capital shares repurchased... (37,864,366) (7,215,594)
----------------- -----------------
Net increase from capital share
transactions............................ 747,249 27,450,552
----------------- -----------------
Total increase (decrease) in net assets...... (1,529,191) 28,100,409
Net assets:
Beginning of period........................ 28,200,409 100,000
----------------- -----------------
End of period.............................. $ 26,671,218 $28,200,409
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 92
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
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 ADVISOR
------------------------------- ------------------------------- CLASS+
MAY 31, 1994 MAY 31, 1994 -------------
(COMMENCEMENT OF (COMMENCEMENT OF JUNE 1, 1995
YEAR ENDED OPERATIONS) TO YEAR ENDED OPERATIONS) TO TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994 1995
----------- ------------------ ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.41 $ 11.43 $ 12.38 $ 11.43 $ 11.45
----------- -------- ----------- -------- -------------
Income from investment operations:
Net investment income (loss).......... 0.04* 0.06* (0.02)* 0.03* 0.11*
Net realized and unrealized gain
(loss) on investments................ (0.98) 0.92 (0.98) 0.92 (0.09)
----------- -------- ----------- -------- -------------
Net increase (decrease) from
investment operations.............. (0.94) 0.98 (1.00) 0.95 0.02
----------- -------- ----------- -------- -------------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.02) -- 0.00
----------- -------- ----------- -------- -------------
Total distributions................. (0.03) -- (0.02) -- 0.00
----------- -------- ----------- -------- -------------
Net asset value, end of period.......... $ 11.44 $ 12.41 $ 11.36 $ 12.38 $ 11.47
----------- -------- ----------- -------- -------------
----------- -------- ----------- -------- -------------
Total investment return (c)............. (7.58)% 8.57 %(b) (8.05)% 8.31 %(b) 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 12,598 $ 14,797 $ 13,978 $ 13,404 $ 95
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 0.41% 2.63 %(a) (0.09)% 2.13 %(a) 0.91%(a)
Without expense reductions and
reimbursement from G.T. Capital...... (0.69)% 0.65 %(a) (1.19)% 0.15 %(a) (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 2.37% 2.40 %(a) 2.87% 2.90 %(a) 1.87%(a)
Without expense reductions and
reimbursement from G.T. Capital...... 3.47% 4.38 %(a) 3.97% 4.88 %(a) 2.97%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income (loss) per share would have been affected by $0.14,
$0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively, for the year ended October 31, 1995, and $0.04 for Class
A and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Statement of Additional Information Page 93
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service distribution expenses, and may differ in its
transfer agent, registration, and certain other class-specific fees and
expenses.
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
$2,547,364, of which $91,443 expires in 2002 and $2,455,921 expires in 2003.
(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 initial
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, Class B, and
Advisor Class shares for purchase.
Statement of Additional Information Page 94
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
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, 1995, G.T. Global retained
$16,516 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $73,935. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $1,931 to G.T. Capital.
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 95
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
3. CAPITAL SHARES
At October 31, 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 Financial
Services 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
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
----------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,262,790 $25,998,648 1,647,315 $20,040,497
Shares issued in connection with reinvestment of distributions............. 2,665 30,350 -- --
---------- ----------- --------- -----------
2,265,455 26,028,998 1,647,315 20,040,497
Shares repurchased......................................................... (2,356,872) (27,189,124) (459,166) (5,648,929)
---------- ----------- --------- -----------
Net increase (decrease).................................................... (91,417) $(1,160,126) 1,188,149 $14,391,568
---------- ----------- --------- -----------
---------- ----------- --------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
----------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 1,073,588 $12,447,266 1,205,189 $14,625,649
Shares issued in connection with reinvestment of distributions............. 2,190 24,898 -- --
---------- ----------- --------- -----------
1,075,778 12,472,164 1,205,189 14,625,649
Shares repurchased......................................................... (928,373) (10,660,475) (126,865) (1,566,665)
---------- ----------- --------- -----------
Net increase............................................................... 147,405 $ 1,811,689 1,078,324 $13,058,984
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
-----------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 9,525 $ 110,453
Shares issued in connection with reinvestment of distributions............. -- --
---------- -----------
9,525 110,453
Shares repurchased......................................................... (1,258) (14,767)
---------- -----------
Net increase............................................................... 8,267 $ 95,686
---------- -----------
---------- -----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.," and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.160 per share (representing an approximate total of
$394,789). The total amount of taxes paid by the Fund to such countries was
approximately $0.015 per share (representing an approximate total of $36,734).
Statement of Additional Information Page 96
<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, 1995, the related statement of operations for the year then
ended, the statements of changes in net assets and the supplementary data for
the year then ended and 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 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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Natural Resources Portfolio as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
supplementary data for the year then ended and 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 15, 1995
Statement of Additional Information Page 97
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Oil (31.3%)
Mobil Corp. ............................................... US 11,000 $ 1,108,250 4.1
British Petroleum Co., PLC ................................ UK 150,100 1,103,153 4.1
Saga Petroleum AS "A" ..................................... NOR 85,000 1,064,923 4.0
Reading & Bates Corp.-/- .................................. US 90,000 1,035,000 3.9
Repsol S.A. - ADR{\/} ..................................... SPN 34,900 1,033,913 3.9
Shell Transport & Trading Co., PLC ........................ UK 80,500 940,248 3.5
Anadarko Petroleum Corp. .................................. US 20,000 867,500 3.2
Total Compagnie Francaise des Petroles S.A. - ADR{\/} ..... FR 20,100 620,588 2.3
Norsk Hydro AS ............................................ NOR 15,175 604,485 2.3
------------
8,378,060
------------
Chemicals (12.8%)
Cytec Industries-/- ....................................... US 19,300 1,056,675 3.9
Cabot Corp. ............................................... US 21,000 997,500 3.7
Occidental Petroleum Corp. ................................ US 33,000 709,500 2.6
Potash Corporation of Saskatchewan, Inc.{\/} .............. CAN 10,000 696,250 2.6
------------
3,459,925
------------
Machinery & Engineering (9.5%)
Rauma Oy - ADR-/- {\/} ................................... FIN 45,700 993,975 3.7
Valmet Corp. "A" .......................................... FIN 32,500 903,799 3.4
Harnischfeger Industries, Inc. ........................... US 20,000 630,000 2.4
------------
2,527,774
------------
Metals - Non-Ferrous (8.2%)
Lonrho PLC ................................................ UK 400,000 986,249 3.7
Diamond Fields Resources, Inc.-/- ......................... CAN 42,800 770,962 2.9
PT Tambang Timah - 144A GDR{.} -/- {\/} ................... INDO 37,500 426,375 1.6
------------
2,183,586
------------
Forest Products (7.7%)
James River Corporation of Virginia ....................... US 30,000 963,750 3.6
Asia Pulp & Paper Co., Ltd. - ADR{\/}-/- ................. INDO 59,000 604,750 2.3
St Laurent Paperboard, Inc.-/- ........................... CAN 33,900 490,415 1.8
------------
2,058,915
------------
Metals - Steel (7.1%)
UCAR International, Inc.-/- ............................... US 41,400 1,179,900 4.4
SGL Carbon AG-/- .......................................... GER 10,900 714,894 2.7
------------
1,894,794
------------
Misc. Materials & Components (6.5%)
Broken Hill Proprietary Co., Ltd. ......................... AUSL 56,167 760,470 2.8
Anglovaal Ltd. "N" ........................................ SAFR 17,350 658,981 2.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 98
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Misc. Materials & Components (Continued)
De Beers Centenary AG - Linked Unit ....................... SAFR 11,400 $ 314,973 1.2
------------
1,734,424
------------
Gold (4.8%)
Ashanti Goldfields Co., Ltd. - GDR{\/} ................... SAFR 41,000 722,625 2.7
Acacia Resources Ltd.-/- .................................. AUSL 352,000 576,302 2.1
------------
1,298,927
------------
Food (3.2%)
IBP, Inc. ................................................. US 14,100 844,238 3.2
------------ -----
TOTAL EQUITY INVESTMENTS (cost $23,524,522) ................. 24,380,643 91.1
------------ -----
<CAPTION>
Market
Repurchase Agreement Value
- ------------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $2,820,000 U.S. Treasury Bill, due
10/17/96 (market value of collateral is $2,675,240,
including collateralized accrued interest) (cost
$2,620,422) ............................................ 2,620,422 9.8
------------ -----
TOTAL INVESTMENTS (cost $26,144,944) ........................ 27,001,065 100.9
Other Assets and Liabilities ................................ (241,081) (0.9)
------------ -----
NET ASSETS .................................................. $ 26,759,984 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $26,759,984.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} 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.
* For Federal income tax purposes, cost is $26,144,944 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,790,765
Unrealized depreciation: (934,644)
-------------
Net unrealized appreciation: $ 856,121
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 99
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country (Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 4.9 4.9
Canada (CAN/CAD) ..................... 7.3 7.3
Finland (FIN/FIM) .................... 7.1 7.1
France (FR/FRF) ...................... 2.3 2.3
Germany (GER/DEM) .................... 2.7 2.7
Indonesia (INDO/IDR) ................. 3.9 3.9
Norway (NOR/NOK) ..................... 6.3 6.3
South Africa (SAFR/ZAR/ZAL) .......... 6.4 6.4
Spain (SPN/ESP) ...................... 3.9 3.9
United Kingdom (UK/GBP) .............. 11.3 11.3
United States (US/USD) ............... 35.0 8.9 43.9
------ --- -----
Total ............................... 91.1 8.9 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $26,759,984.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks................................................................ 213,478 1.42407 11/30/95 $ 2,813
Swedish Krona................................................................. 662,756 7.16200 11/22/95 48,403
------------ -------------
Total Contracts to Buy (Payable amount $825,018).......................... 876,234 51,216
------------ -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 3.27%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Deutsche Marks................................................................ 106,739 1.45648 11/30/95 (3,750)
Deutsche Marks................................................................ 284,637 1.46545 11/30/95 (11,683)
French Francs................................................................. 409,069 5.07400 11/20/95 (14,903)
Swedish Krona................................................................. 662,756 7.41800 11/22/95 (69,605)
------------ -------------
Total Contracts to Sell (Receivable amount $1,363,260).................... 1,463,201 (99,941)
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 5.47%
Total Open Forward Foreign Currency Contracts, Net........................ $ (48,725)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 100
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$26,144,944) (Note 1 )........................... $27,001,065
Foreign currencies (cost $1,757).................. 1,771
Dividends and dividend withholding tax reclaims
receivable....................................... 43,460
-----------
Total assets.................................... 27,046,296
-----------
Liabilities:
Payable for investment management and
administration fees (Note 2)..................... 213,856
Payable for open forward foreign currency
contracts, net (Note 1).......................... 48,725
Payable for professional fees..................... 7,553
Payable for printing and postage expenses......... 4,713
Payable for Trustees' fees and expenses (Note
2)............................................... 2,801
Payable for custodian fees (Note 1)............... 2,521
Other accrued expenses............................ 6,143
-----------
Total liabilities............................... 286,312
-----------
Net assets.......................................... $26,759,984
-----------
-----------
Net assets consist of:
Paid in capital................................... $27,781,110
Accumulated net investment income................. 692,942
Accumulated net realized loss on investments and
foreign currency transactions.................... (2,521,686)
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies..... (48,503)
Net unrealized appreciation of investments........ 856,121
-----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $26,759,984
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 101
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................ $ 437,615
Dividend income (net of foreign withholding tax of
$36,734).................................................. 392,475
-----------
Total investment income.................................. 830,090
-----------
Expenses:
Investment management and administration fees (Note 2)..... 213,856
Custodian fees (Note 1).................................... 40,204
Legal fees................................................. 12,300
Audit fees................................................. 8,750
Trustees' fees and expenses (Note 2)....................... 7,119
Other expenses............................................. 1,900
-----------
Total expenses before reductions......................... 284,129
-----------
Expense reductions (Notes 1 & 4)....................... (9,670)
-----------
Total net expenses....................................... 274,459
-----------
Net investment income........................................ 555,631
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $(2,302,171)
Net realized loss on foreign currency
transactions.............................. (89,256)
-----------
Net realized loss during the year........................ (2,391,427)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (43,764)
Net change in unrealized appreciation of
investments............................... 177,530
-----------
Net unrealized appreciation during the year.............. 133,766
-----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (2,257,661)
-----------
Net decrease in net assets resulting from operations......... $(1,702,030)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 102
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 555,631 $ 137,311
Net realized loss on investments and
foreign currency transactions............. (2,391,427) (130,259)
Net change in unrealized depreciation on
translation of assets and
liabilities in foreign currencies......... (43,764) (4,739)
Net change in unrealized appreciation of
investments............................... 177,530 678,591
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (1,702,030) 680,904
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 34,259,648 33,302,836
Withdrawals................................ (32,747,373) (7,134,101)
----------------- -----------------
Net increase from beneficial interest
transactions............................ 1,512,275 26,168,735
----------------- -----------------
Total increase (decrease) in net assets...... (189,755) 26,849,639
Net assets:
Beginning of period........................ 26,949,739 100,100
----------------- -----------------
End of period.............................. $ 26,759,984 $26,949,739
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 103
<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>
YEAR ENDED MAY 31, 1994
OCTOBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO OCTOBER 31, 1994
----------- -----------------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 26,760 $ 26,950
Ratio of net investment income to
average net assets..................... 1.88% 3.47 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 0.93% 2.15 %(a)
Without expense reductions............ 0.96% -- % *
Portfolio turnover rate................. 87% 137 %
</TABLE>
- ----------------
(a) Annualized.
* Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 104
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 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 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 of
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.
(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 Contract") is an agreement between
two parties to buy
Statement of Additional Information Page 105
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
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 amounts 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 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-
Statement of Additional Information Page 106
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
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 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, 1995, the Portfolio received $1,364 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) 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 natural
resources 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 October 31, 1995, 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 year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$20,836,799 and $23,399,771, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $8,306 under these arrangements.
Statement of Additional Information Page 107
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Consumer Products and Services Fund and Board
of Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Consumer Products and Services Fund, one of the funds organized as a
series of G.T. Investment Funds, Inc., as of October 31, 1995, the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period from December 30, 1994 (commencement of
operations) to October 31, 1995. 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 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, 1995 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 Consumer Products and Services Fund as of October 31, 1995, the
results of its operations, the changes in its net assets and the financial
highlights for the period from December 30, 1994 (commencement of operations) to
October 31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 108
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Consumer Products and
Services Portfolio (cost $6,112,921) (Note 1).... $6,502,154
Receivable for Fund shares sold................... 490,612
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 267,192
Unamortized organizational costs (Note 1)......... 42,893
----------
Total assets.................................... 7,302,851
----------
Liabilities:
Payable for organization expenses (Note 1)........ 40,263
Payable for professional fees..................... 25,016
Payable for printing and postage expenses......... 9,758
Payable for service and distribution expenses
(Note 2)......................................... 7,324
Payable for administration fees (Note 2).......... 5,933
Payable for registration and filing fees.......... 4,366
Payable for transfer agent fees (Note 2).......... 3,186
Payable for Directors' fees and expenses (Note
2)............................................... 697
Payable for fund accounting fees (Note 2)......... 123
Other accrued expenses............................ 1,210
----------
Total liabilities............................... 97,876
----------
Net assets.......................................... $7,204,975
----------
----------
Class A:
Net asset value and redemption price per share
($4,082,173 DIVIDED BY 279,721 shares
outstanding)....................................... $ 14.59
----------
----------
Maximum offering price per share (100/95.25 of
$14.59) *.......................................... $ 15.32
----------
----------
Class B:+
Net asset value and offering price per share
($2,958,974 DIVIDED BY 203,634 shares
outstanding)....................................... $ 14.53
----------
----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($163,828 DIVIDED BY
11,194 shares outstanding)......................... $ 14.64
----------
----------
Net assets consist of:
Paid in capital (Note 3).......................... $6,418,609
Accumulated net realized gain on investments and
foreign currency transactions.................... 397,133
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Consumer Products and Services
Portfolio........................................ 6,921
Net unrealized appreciation of investments --
Global Consumer Products and Services
Portfolio........................................ 382,312
----------
Total -- representing net assets applicable to
capital shares outstanding......................... $7,204,975
----------
----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value less any
applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 109
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Consumer Products and Services
Portfolio.............................................. $ 37,739
Dividend income -- Global Consumer Products and Services
Portfolio.............................................. 22,144
----------
Total investment income............................... 59,883
----------
Expenses:
Expenses -- Global Consumer Products and Services
Portfolio.............................................. 54,854
Registration and filing fees............................ 101,900
Legal fees.............................................. 39,448
Audit fees.............................................. 31,280
Transfer agent fees (Note 2)............................ 29,425
Printing and postage expenses........................... 28,600
Service and distribution expenses: (Note 2)
Class A.................................. $ 8,002
Class B.................................. 7,388 15,390
--------
Directors' fees and expenses (Note 2)................... 9,520
Amortization of organization costs (Note 1)............. 8,607
Administration fees (Note 2)............................ 5,933
Fund accounting fees (Note 2)........................... 622
Other expenses.......................................... 2,014
----------
Total expenses before reductions...................... 327,593
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................ (267,192)
Expense reductions -- Global Consumer Products and
Services Portfolio.................................. (1,677)
----------
Total net expenses.................................... 58,724
----------
Net investment income..................................... 1,159
----------
Net realized and unrealized gain on
investments and foreign currencies:
Net realized gain on investments -- Global
Consumer Products and Services
Portfolio................................. 402,673
Net realized loss on foreign currency
transactions -- Global Consumer Products
and Services Portfolio.................... (6,699)
--------
Net realized gain during the period................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global Consumer
Products and Services Portfolio........... 6,921
Net change in unrealized appreciation of
investments -- Global Consumer Products
and Services Portfolio.................... 382,312
--------
Net unrealized appreciation during the period......... 389,233
----------
Net realized and unrealized gain on investments and
foreign currencies....................................... 785,207
----------
Net increase in net assets resulting from operations...... $ 786,366
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 110
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
-----------------
<S> <C>
Increase in net assets
Operations:
Net investment income............................. $ 1,159
Net realized gain on investments and foreign
currency transactions -- Global Consumer Products
and Services Portfolio........................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies -- Global Consumer Products and
Services Portfolio............................... 6,921
Net change in unrealized appreciation of
investments -- Global Consumer Products and
Services
Portfolio........................................ 382,312
-----------------
Net increase in net assets resulting from
operations....................................... 786,366
-----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested....................................... 7,649,630
Decrease from capital shares repurchased.......... (1,331,021)
-----------------
Net increase from capital share transactions.... 6,318,609
-----------------
Total increase in net assets........................ 7,104,975
Net assets:
Beginning of period............................... 100,000
-----------------
End of period..................................... $ 7,204,975
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 111
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
------------------------------ ------------------------------ -------------
DECEMBER 30, 1994 DECEMBER 30, 1994 JUNE 1, 1995
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS) TO
TO OCTOBER 31, TO OCTOBER 31, OCTOBER 31,
1995* 1995* 1995*
------------------------------ ------------------------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.43 $ 11.84
------- ------- -------------
Income from investment operations:
Net investment income (loss).......... 0.02** (0.04)** 0.04**
Net realized and unrealized gain on
investments.......................... 3.14 3.14 2.76
------- ------- -------------
Net increase from investment
operations......................... 3.16 3.10 2.80
------- ------- -------------
Net asset value, end of period.......... $ 14.59 $ 14.53 $ 14.64
------- ------- -------------
------- ------- -------------
Total investment return (c)............. 27.65 %(b) 27.12 %(b) 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 4,082 $ 2,959 $ 164
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 0.20 %(a) (0.30)%(a) 0.70%(a)
Without expense reductions and
reimbursement by G.T. Capital........ (11.11)%(a) (11.61)%(a) (10.61)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 2.32 %(a) 2.82 %(a) 1.82%(a)
Without expense reductions and
reimbursement by G.T. Capital........ 13.63 %(a) 14.13 %(a) 13.13%(a)
</TABLE>
- ----------------
(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.
** Before reimbursement by G.T. Capital Management, Inc., net investment
income per share would have been reduced by $1.12, $1.04 and $0.61 for
Class A, Class B, and Advisor Class, respectively.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 112
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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 initial
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with
Statement of Additional Information Page 113
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
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, 1995, G.T. Global retained $3,380 of such sales charges. G.T. Global
also makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the period ended October 31,
1995, G.T. Global collected CDSCs in the amount of $986. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $318 to G.T. Capital.
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 114
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
3. CAPITAL SHARES
At October 31, 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; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995
-----------------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------- ------------ --------------
<S> <C> <C>
Shares sold......................................... 330,327 $ 4,257,766
Shares repurchased.................................. (54,980) (746,671)
------------ --------------
Net increase........................................ 275,347 $ 3,511,095
------------ --------------
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1995
-------------------
CLASS B SHARES AMOUNT
- ---------------------------------------------------- ------- ----------
<S> <C> <C>
Shares sold......................................... 246,365 $3,239,565
Shares repurchased.................................. (47,105) (579,906)
------- ----------
Net increase........................................ 199,260 $2,659,659
------- ----------
------- ----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF
SHARES) TO OCTOBER
31, 1995
-------------------
ADVISOR CLASS SHARES AMOUNT
- ---------------------------------------------------- ------- ----------
<S> <C> <C>
Shares sold......................................... 11,525 $ 152,299
Shares repurchased.................................. (331) (4,444)
------- ----------
Net increase........................................ 11,194 $ 147,855
------- ----------
------- ----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 115
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global Consumer Products and
Services Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Consumer Products and Services Portfolio, including the portfolio of
investments, as of October 31, 1995, the related statement of operations, the
statement of changes in net assets and supplementary data for the period from
December 30, 1994 (commencement of operations) to October 31, 1995. 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 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, 1995 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
Consumer Products and Services Portfolio as of October 31, 1995, the results of
its operations, the changes in its net assets and the supplementary data for the
period from December 30, 1994 (commencement of operations) to October 31, 1995,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 116
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (36.9%)
Gucci Group - NY Registered Shares{\/} .................... ITLY 9,000 $ 270,000 4.2
TEXTILES & APPAREL
Robert Mondavi Corp. "A"-/- ............................... US 8,400 237,300 3.7
BEVERAGES - ALCOHOLIC
Fila Holding S.p.A. - ADR{\/} ............................. ITLY 5,400 232,875 3.6
TEXTILES & APPAREL
Heineken N.V. ............................................. NETH 1,225 217,361 3.3
BEVERAGES - ALCOHOLIC
Mattel, Inc. .............................................. US 7,000 201,250 3.1
TOYS
Philip Morris Cos., Inc. .................................. US 2,225 188,013 2.9
TOBACCO
Healthy Planet Products, Inc.-/- .......................... US 14,000 171,500 2.6
OTHER CONSUMER GOODS
Noble China-/- ............................................ CAN 50,400 154,290 2.4
BEVERAGES - ALCOHOLIC
St. John Knits, Inc. ...................................... US 3,000 143,625 2.2
TEXTILES & APPAREL
Amway Japan Ltd. - ADR{\/} ................................ JPN 7,500 142,500 2.2
HOUSEHOLD PRODUCTS
De Rigo S.p.A. - ADR{\/} .................................. ITLY 5,000 103,125 1.6
TEXTILES & APPAREL
Seagram Co., Ltd. ......................................... CAN 2,800 101,919 1.6
BEVERAGES - ALCOHOLIC
Gillette Co. ............................................. US 2,000 96,750 1.5
PERSONAL CARE/COSMETICS
Nike, Inc. "B" ............................................ US 1,200 68,100 1.0
TEXTILES & APPAREL
Amway Asia Pacific Ltd.{\/} ............................... HK 1,900 62,225 1.0
HOUSEHOLD PRODUCTS
------------
2,390,833
------------
Services (30.7%)
Safeway, Inc.-/- .......................................... US 4,600 217,350 3.3
RETAILERS-FOOD
Vons Cos., Inc.-/- ........................................ US 8,100 205,538 3.2
RETAILERS-FOOD
Hennes & Mauritz AB "B" Free ............................. SWDN 2,970 194,314 3.0
RETAILERS-APPAREL
Wickes PLC ................................................ UK 94,000 184,969 2.8
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. JPN 3,700 180,638 2.8
RETAILERS-APPAREL
Polygram N.V. - ADR{\/} ................................... NETH 2,900 179,800 2.8
BROADCASTING & PUBLISHING
Emmis Broadcasting Corp. "A"-/- ........................... US 6,400 169,600 2.6
BROADCASTING & PUBLISHING
Tandy Corp. ............................................... US 3,300 162,938 2.5
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 117
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
La Quinta Inns, Inc. ..................................... US 5,900 $ 151,925 2.3
LODGING
Fabri-Centers of America: ................................. US -- -- 2.0
RETAILERS-APPAREL
"A"-/- .................................................. -- 4,900 72,888 --
"B"-/- .................................................. -- 4,900 56,963 --
Aoyama Trading Co., Ltd. ................................. JPN 4,400 118,814 1.8
RETAILERS-APPAREL
Capital Cities/ABC, Inc. .................................. US 900 106,763 1.6
BROADCASTING & PUBLISHING
------------
2,002,500
------------
Consumer Durables (12.3%)
Redman Industries, Inc.-/- ............................... US 8,100 210,600 3.2
HOUSING
Belmont Homes, Inc. ....................................... US 11,500 201,250 3.1
HOUSING
Black & Decker Corp. ...................................... US 5,800 196,475 3.0
APPLIANCES & HOUSEHOLD
Nokia AB Preferred - ADR{\/} .............................. FIN 3,500 195,125 3.0
CONSUMER ELECTRONICS
------------
803,450
------------
Multi Industry/Miscellaneous (3.0%)
Malbak Ltd. ............................................... SAFR 29,000 192,856 3.0
------------
CONGLOMERATE
Health Care (2.9%)
COR Therapeutics, Inc.-/- ................................. US 10,000 103,750 1.6
BIOTECHNOLOGY
Biovail Corporation International-/- ...................... US 2,200 85,250 1.3
PHARMACEUTICALS
------------
189,000
------------
Technology (0.9%)
Brooktree Corp.-/- ........................................ US 5,000 60,000 0.9
COMPUTERS & PERIPHERALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $5,256,327) ................. 5,638,639 86.7
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.8%, collateralized by $1,180,000 U.S. Treasury Bill, due
2/08/96 (market value of collateral is $1,162,595,
including accrued interest). (cost $1,138,183) .......... 1,138,183 17.5
------------ -----
TOTAL INVESTMENTS (cost $6,394,510) ......................... 6,776,822 104.2
Other Assets and Liabilities ................................ (274,568) (4.2)
------------ -----
NET ASSETS .................................................. $ 6,502,254 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $6,502,254.
{\/} U.S. currency denominated.
-/- Non-income producing security.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 118
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<C> <S>
* For Federal income tax purposes, cost is $6,394,510 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 536,510
Unrealized depreciation: (154,198)
-------------
Net unrealized appreciation: $ 382,312
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Canada (CAN/CAD) ..................... 4.0 4.0
Finland (FIN/FIM) .................... 3.0 3.0
Hong Kong (HK/HKD) ................... 1.0 1.0
Italy (ITLY/ITL) ..................... 9.4 9.4
Japan (JPN/JPY) ...................... 6.8 6.8
Netherlands (NETH/NLG) ............... 6.1 6.1
South Africa (SAFR/ZAR) .............. 3.0 3.0
Sweden (SWDN/SEK) .................... 3.0 3.0
United Kingdom (UK/GBP) .............. 2.8 2.8
United States (US/USD) ............... 47.6 13.3 60.9
------ --- -----
Total ............................... 86.7 13.3 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $6,502,254.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell: Dollars) Price Date Appreciation
------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Japanese Yen.................................................................. 193,549 98.70000 11/24/95 $ 6,451
------------- -------------
Total Contracts to Sell (Receivable amount $200,000)...................... 193,549 6,451
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 2.98%
Total Open Forward Foreign Currency Contracts, Net........................ $ 6,451
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 119
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$5,256,327) (Note 1)............................. $5,638,639
Repurchase agreement, at value and cost (Note
1)............................................... 1,138,183
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 6,451
Dividends receivable.............................. 4,747
----------
Total assets.................................... 6,788,020
----------
Liabilities:
Payable for securities purchased.................. 192,170
Due to custodian.................................. 54,178
Payable for investment management and
administration fees (Note 2)..................... 16,284
Payable for professional fees..................... 8,405
Payable for Trustees' fees and expenses (Note
2)............................................... 6,080
Payable for printing and postage expenses......... 3,200
Payable for custodian fees (Note 1)............... 2,409
Other accrued expenses............................ 3,040
----------
Total liabilities............................... 285,766
----------
Net assets.......................................... $6,502,254
----------
----------
Net assets consist of:
Paid in capital................................... $5,710,341
Accumulated net investment income................. 6,706
Accumulated net realized gain on investments and
foreign currency transactions.................... 395,974
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 6,921
Net unrealized appreciation of investments........ 382,312
----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $6,502,254
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 120
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income......................................... $ 37,739
Dividend income (net of foreign withholding tax of
$525).................................................. 22,144
--------
Total investment income............................... 59,883
--------
Expenses:
Investment management and administration fees (Note
2)..................................................... 16,284
Custodian fees (Note 1)................................. 15,890
Legal fees.............................................. 6,080
Trustees' fees and expenses (Note 2).................... 6,080
Audit fees.............................................. 4,280
Printing and postage expenses........................... 3,200
Other expenses.......................................... 3,040
--------
Total expenses before reductions...................... 54,854
--------
Expense reductions (Notes 1 & 4).................... (1,677)
--------
Total net expenses.................................... 53,177
--------
Net investment income..................................... 6,706
--------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... $402,673
Net realized loss on foreign currency
transactions.............................. (6,699)
--------
Net realized gain during the period................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 6,921
Net change in unrealized appreciation of
investments............................... 382,312
--------
Net unrealized appreciation during the period......... 389,233
--------
Net realized and unrealized gain on investments and
foreign currencies....................................... 785,207
--------
Net increase in net assets resulting from operations...... $791,913
--------
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 121
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
-----------------
<S> <C>
Increase in net assets
Operations:
Net investment income............................. $ 6,706
Net realized gain on investments and foreign
currency transactions............................ 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies....................................... 6,921
Net change in unrealized appreciation of
investments...................................... 382,312
-----------------
Net increase in net assets resulting from
operations....................................... 791,913
-----------------
Beneficial interest transactions:
Contributions..................................... 6,002,349
Withdrawals....................................... (392,108)
-----------------
Net increase from beneficial interest
transactions................................... 5,610,241
-----------------
Total increase in net assets........................ 6,402,154
Net assets:
Beginning of period............................... 100,100
-----------------
End of period..................................... $6,502,254
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 122
<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 OCTOBER 31, 1995
------------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 6,502
Ratio of net investment income to
average net assets:.................... 0.30 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 2.37 %(a)
Without expense reductions............ 2.44 %(a)
Portfolio turnover rate................. 240 %(a)
</TABLE>
- ----------------
(a) Annualized.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 123
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 year end, resulting from changes in exchange rates.
(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.
Statement of Additional Information Page 124
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
(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 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.
Statement of Additional Information Page 125
<PAGE>
GLOBAL CONSUMER PRODUCTS AND 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 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
October 31, 1995, there were no securities on loan to brokers. For the period
ended October 31, 1995, the Fund received fees of $107 which were used to reduce
the Fund's custodian fees.
(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 October 31, 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 October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$8,990,298 and $4,141,883, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the period ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the period ended October 31, 1995, the
Portfolio's expenses were reduced by $1,570 under these arrangements.
Statement of Additional Information Page 126
<PAGE>
GT GLOBAL HEALTH CARE FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Health Care Fund
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, 1995, 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, 1995 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, 1995, 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 15, 1995
Statement of Additional Information Page 127
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Pharmaceuticals (38.8%)
Eli Lilly & Co. ........................................... US 200,000 $ 19,325,000 3.9
Roche Holdings AG Genusscheine ............................ SWTZ 2,500 18,173,407 3.7
Merck & Co., Inc. ......................................... US 300,000 17,250,000 3.5
Sandoz AG - Registered .................................... SWTZ 15,000 12,384,351 2.5
Bayer AG ................................................. GER 45,000 11,971,861 2.4
Pfizer, Inc. .............................................. US 200,000 11,475,000 2.3
American Home Products Corp. .............................. US 100,000 8,862,500 1.8
Elan Corp., PLC - ADR-/- {\/} ............................. IRE 200,000 8,025,000 1.6
Sanofi S.A. ............................................... FR 110,000 7,018,308 1.4
Warner-Lambert Co. ........................................ US 80,000 6,810,000 1.4
Ethical Holdings PLC - ADR{::} -/- {\/} ................... UK 730,000 6,478,750 1.3
Ares-Serono Group "B" ..................................... SWTZ 9,220 6,052,428 1.2
Takeda Chemical Industries ................................ JPN 400,000 5,635,456 1.1
Schering-Plough Corp. ..................................... US 100,000 5,362,500 1.1
SmithKline Beecham PLC - ADR Units{\/} .................... UK 100,000 5,187,500 1.0
Upjohn Co. ................................................ US 100,000 5,075,000 1.0
Sankyo Co., Ltd. .......................................... JPN 220,000 4,842,970 1.0
Allergan, Inc. ............................................ US 160,000 4,700,000 0.9
R.P. Scherer Corp.-/- ..................................... US 100,000 4,450,000 0.9
Astra AB "B" Free ......................................... SWDN 120,000 4,341,599 0.9
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 100,000 3,925,000 0.8
Roussel-Uclaf ............................................. FR 20,000 3,281,170 0.7
Santen Pharmaceutical ..................................... JPN 120,000 2,841,209 0.6
Pharmacia Aktiebolag - ADR{\/} ............................ SWDN 75,000 2,625,000 0.5
Advanced Therapeutic Systems-/- ........................... US 77,400 2,138,175 0.4
Merck KGaA-/- ............................................. GER 50,000 2,089,107 0.4
Dura Pharmaceuticals, Inc.-/- ............................. US 60,000 1,755,000 0.4
Therapeutic Discovery Corp. Units-/- ...................... US 100,000 675,000 0.1
------------
192,751,291
------------
Health Care Services (24.0%)
Pacificare Health Systems Inc.: ........................... US -- -- 5.4
"B"-/- .................................................. -- 275,000 20,006,250 --
"A"-/- .................................................. -- 100,000 7,050,000 --
United Healthcare Corp. ................................... US 200,000 10,625,000 2.1
Health Management Associates, Inc. "A"-/- ................. US 375,000 8,062,500 1.6
Columbia/HCA Healthcare Corp. ............................. US 150,000 7,368,750 1.5
Health Systems International, Inc. "A"-/- ................. US 200,000 6,075,000 1.2
Health Care & Retirement Corp.-/- ......................... US 200,000 5,875,000 1.2
Vencor, Inc.-/- ........................................... US 200,000 5,550,000 1.1
FHP International Corp.-/- ................................ US 200,000 4,850,000 1.0
HealthCare COMPARE Corp.-/- .............................. US 125,000 4,625,000 0.9
HEALTHSOUTH Corp.-/- ...................................... US 130,000 3,396,250 0.7
Coventry Corp.-/- ......................................... US 165,000 3,238,125 0.7
Wellpoint Health Networks, Inc. "A"-/- .................... US 100,000 3,050,000 0.6
Physician Reliance Network, Inc.-/- ....................... US 85,000 2,826,250 0.6
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 128
<PAGE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care Services (Continued)
Lincare Holdings, Inc.-/- ................................. US 99,000 $ 2,462,625 0.5
Apria Healthcare Group, Inc.-/- ........................... US 100,000 2,162,500 0.4
Humana, Inc.-/- ........................................... US 100,000 2,112,500 0.4
Total Renal Care Holdings, Inc.-/- ........................ US 100,000 2,037,500 0.4
Horizon/CMS Healthcare Corp.-/- ........................... US 100,000 2,025,000 0.4
Multicare Companies, Inc.-/- .............................. US 100,000 1,875,000 0.4
Cerner Corp.-/- ........................................... US 70,000 1,855,000 0.4
Owen Healthcare, Inc. .................................... US 100,000 1,825,000 0.4
Inphynet Medical Management, Inc.-/- ...................... US 100,000 1,800,000 0.4
Physicians Health Services, Inc. "A"-/- ................... US 50,000 1,662,500 0.3
Community Health Systems, Inc.-/- ......................... US 50,000 1,587,500 0.3
GranCare, Inc.-/- ........................................ US 100,000 1,462,500 0.3
Genesis Health Ventures, Inc.-/- .......................... US 44,600 1,287,825 0.3
Bergen Brunswig Corp. "A" ................................. US 50,000 1,037,500 0.2
Coastal Physician Group, Inc.-/- .......................... US 62,300 817,688 0.2
Physician Corporation of America-/- ....................... US 20,000 307,500 0.1
------------
118,916,263
------------
Medical Technology & Supplies (23.6%)
Medtronic, Inc. ........................................... US 425,000 24,543,750 4.9
Cordis Corp.-/- ........................................... US 200,000 22,100,000 4.4
Johnson & Johnson ......................................... US 225,000 18,337,500 3.7
Boston Scientific Corp.-/- ................................ US 200,000 8,425,000 1.7
Nellcor, Inc.-/- .......................................... US 128,000 7,360,000 1.5
Becton, Dickinson & Co. ................................... US 100,000 6,500,000 1.3
Target Therapeutics, Inc.-/- .............................. US 80,000 6,200,000 1.3
Fresenius AG Preferred .................................... GER 6,975 5,575,837 1.1
Amersham International PLC ................................ UK 300,000 4,556,662 0.9
MediSense, Inc.-/- ........................................ US 100,000 2,137,500 0.4
Orthologic Corp.-/- ....................................... US 200,000 1,925,000 0.4
St. Jude Medical, Inc.-/- ................................. US 30,000 1,597,500 0.3
TECNOL Medical Products, Inc.-/- .......................... US 75,000 1,425,000 0.3
Mentor Corp. .............................................. US 60,000 1,320,000 0.3
Sonus Pharmaceuticals, Inc.-/- ........................... US 150,000 1,200,000 0.2
Angeion Corp.-/- .......................................... US 150,000 1,143,750 0.2
Anesta Corp.-/- .......................................... US 100,000 1,062,500 0.2
ATS Medical, Inc.-/- ...................................... US 125,000 984,375 0.2
Maxxim Medical, Inc.-/- ................................... US 45,000 624,375 0.1
KeraVision, Inc.-/- ....................................... US 40,000 495,000 0.1
Molecular Dynamics, Inc.-/- ............................... US 80,000 480,000 0.1
------------
117,993,749
------------
Biotechnology (8.0%)
Amgen, Inc.-/- ............................................ US 300,000 14,400,000 2.9
Genzyme Corp.: ............................................ US -- -- 1.3
General Division-/- ..................................... -- 100,000 5,825,000 --
Tissue Repair Division-/- ............................... -- 13,499 241,295 --
Metra Biosystems, Inc.-/- ................................. US 200,000 3,700,000 0.7
Protein Design Labs, Inc.-/- .............................. US 200,000 3,350,000 0.7
COR Therapeutics, Inc.-/- ................................. US 300,000 3,112,500 0.6
Biochem Pharma, Inc.-/- .................................. CAN 70,000 2,677,500 0.5
Matrix Pharmaceutical, Inc.-/- ........................... US 100,000 1,450,000 0.3
Somatix Therapy Corp.-/- .................................. US 250,000 1,218,750 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 129
<PAGE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Biotechnology (Continued)
Gilead Sciences, Inc.-/- .................................. US 50,000 $ 975,000 0.2
Neurex Corp.-/- ........................................... US 200,000 950,000 0.2
Univax Biologics, Inc.-/- ................................. US 100,000 631,250 0.1
Alpha-Beta Technology, Inc.-/- ............................ US 80,000 610,000 0.1
Ribi ImmunoChem Research, Inc.-/- ......................... US 100,000 450,000 0.1
Liposome Co., Inc. Convertible Preferred "A"-/- ........... US 10,000 310,000 0.1
Enzon, Inc. Preferred ..................................... US 16,000 105,000 --
------------
40,006,295
------------ -----
TOTAL EQUITY INVESTMENTS (cost $354,468,534) ................ 469,667,598 94.4
------------ -----
<CAPTION>
No. of Market % of Net
Warrants Country Warrants Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Elan Corp. - ADR Warrants, expire 8/12/98-/- .............. US 77,400 1,122,300 0.2
PHARMACEUTICALS
ATS Medical Inc. Warrants, expire 3/2/97-/- ............... US 125,000 78,125 --
MEDICAL TECHNOLOGY & SUPPLIES
------------ -----
TOTAL WARRANTS (cost $864,953) .............................. 1,200,425 0.2
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995 for an effective yield of
5.80% collateralized by $52,180,000 U.S. Treasury Strips
due 2/15/02 (market value of collateral is $36,112,125,
including accrued interest). (cost $34,975,634) ......... 34,975,634 7.0
------------ -----
TOTAL INVESTMENTS (cost $390,309,121) ...................... 505,843,657 101.6
Other Assets and Liabilities ................................ (8,184,630) (1.6)
------------ -----
NET ASSETS .................................................. $497,659,027 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $497,659,027.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{::} See Note 5 of Notes to Financial Statements.
{F} The principal amount should be read as units.
* For Federal income tax purposes, cost is $390,841,738 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 122,972,190
Unrealized depreciation: (7,970,271)
-------------
Net unrealized appreciation: $ 115,001,919
-------------
-------------
Abbreviation:
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 130
<PAGE>
GT GLOBAL HEALTH CARE FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Canada (CAN/CAD) ..................... 0.5 0.5
France (FR/FRF) ...................... 2.1 2.1
Germany (GER/DEM) .................... 3.9 3.9
Ireland (IRE/IEP) .................... 1.6 1.6
Israel (ISRL/ILS) .................... 0.8 0.8
Japan (JPN/JPY) ...................... 2.7 2.7
Sweden (SWDN/SEK) .................... 1.4 1.4
Switzerland (SWTZ/CHF) ............... 7.4 7.4
United Kingdom (UK/GBP) .............. 3.2 3.2
United States (US/USD) ............... 70.8 0.2 5.4 76.4
------ --- --- -----
Total ............................... 94.4 0.2 5.4 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $497,659,027.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ---------------------------------------------------------------------------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.............................................................. 1,778,980 1.42407 11/30/95 23,448
Japanese Yen................................................................ 1,237,648 97.97200 11/14/95 $ (53,537)
Japanese Yen................................................................ 753,351 100.01800 11/14/95 (16,512)
Japanese Yen................................................................ 1,029,516 99.87500 11/24/95 (21,798)
------------- -------------
Total Contracts to Buy (Payable amount $4,867,894)........................ 4,799,495 (68,399)
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS .96%
Contracts to Sell:
Deutsche Marks.............................................................. 1,279,045 1.37700 11/03/95 28,145
Deutsche Marks.............................................................. 2,561,731 1.45648 11/30/95 (90,009)
French Francs............................................................... 1,935,154 4.81600 11/06/95 29,132
Japanese Yen................................................................ 2,152,431 91.70000 11/14/95 246,696
Japanese Yen................................................................ 3,815,674 92.70000 11/14/95 391,446
Japanese Yen................................................................ 1,907,837 96.50400 11/14/95 112,805
Japanese Yen................................................................ 1,029,516 95.10240 11/24/95 74,557
Japanese Yen................................................................ 2,456,978 96.52300 11/30/95 133,078
------------- -------------
Total Contracts to Sell (Receivable amount $18,064,216)................... 17,138,366 925,850
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 3.44%
Total Open Forward Foreign Currency Contracts, Net........................ $ 857,451
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 131
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$390,309,121) (Note 1)........................... $505,843,657
Foreign currencies (cost $5,466,965).............. 5,461,800
Receivable for securities sold.................... 13,966,323
Receivable for Fund shares sold................... 3,110,272
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 857,451
Dividends and dividend withholding tax reclaims
receivable....................................... 232,677
Cash held as collateral for securities loaned
(Note 1)......................................... 24,944,125
------------
Total assets.................................... 554,416,305
------------
Liabilities:
Payable for Fund shares repurchased (Note 2)...... 25,896,723
Payable for securities purchased.................. 3,974,762
Payable for forward foreign currency contracts --
closed (Note 1).................................. 968,248
Payable for investment management and
administration fees (Note 2)..................... 416,830
Payable for service and distribution expenses
(Note 2)......................................... 242,109
Payable for transfer agent fees (Note 2).......... 124,655
Payable for printing and postage expenses......... 64,476
Payable for professional fees..................... 34,148
Payable for registration and filing fees.......... 25,618
Payable for custodian fees (Note 1)............... 14,291
Payable for fund accounting fees (Note 2)......... 10,782
Payable for Directors' fees and expenses (Note
2)............................................... 1,229
Other accrued expenses............................ 39,282
Collateral for securities loaned (Note 1)......... 24,944,125
------------
Total liabilities............................... 56,757,278
------------
Net assets.......................................... $497,659,027
------------
------------
Class A:
Net asset value and redemption price per share
($426,380,030 DIVIDED BY 19,527,021 shares
outstanding)....................................... $ 21.84
------------
------------
Maximum offering price per share (100/95.25 of
$21.84) *.......................................... $ 22.93
------------
------------
Class B:+
Net asset value and offering price per share
($70,739,602 DIVIDED BY 3,280,666 shares
outstanding)....................................... $ 21.56
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and
redemption price per share ($539,395 DIVIDED BY
24,658 shares outstanding)......................... $ 21.88
------------
------------
Net assets consist of:
Paid in capital................................... $317,402,692
Accumulated net realized gain on investments and
foreign currency transactions.................... 63,862,315
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 859,484
Net unrealized appreciation of investments........ 115,534,536
------------
Total -- representing net assets applicable to
capital shares outstanding......................... $497,659,027
------------
------------
<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 132
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$137,619)................................................. $ 3,781,268
Interest income............................................ 1,320,732
Other income............................................... 99,687
-----------
Total investment income.................................. 5,201,687
-----------
Expenses:
Investment management and administration fees (Note 2)..... 4,453,857
Service and distribution expenses: (Note 2)
Class A.................................. $ 2,021,331
Class B.................................. 523,545 2,544,876
-----------
Transfer agent fees (Note 2)............................... 1,365,000
Printing and postage expenses.............................. 185,925
Custodian fees (Note 1).................................... 128,144
Fund accounting fees (Note 2).............................. 116,877
Registration and filing fees............................... 71,223
Audit fees................................................. 51,100
Legal fees................................................. 38,150
Directors' fees and expenses (Note 2)...................... 10,950
Insurance expenses......................................... 5,377
Other expenses............................................. 20,000
-----------
Total expenses before reductions......................... 8,991,479
-----------
Expense reductions (Notes 1 & 6)....................... (259,926)
-----------
Total net expenses....................................... 8,731,553
-----------
Net investment loss.......................................... (3,529,866)
-----------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 71,316,381
Net realized loss on foreign currency
transactions.............................. (4,272,875)
-----------
Net realized gain during the year........................ 67,043,506
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign
currencies................................ 961,568
Net change in unrealized appreciation of
investments............................... 19,234,934
-----------
Net unrealized appreciation during the year.............. 20,196,502
-----------
Net realized and unrealized gain on investments and foreign
currencies.................................................. 87,240,008
-----------
Net increase in net assets resulting from operations......... $83,710,142
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 133
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment loss........................ $ (3,529,866) $ (5,648,191)
Net realized gain on investments and
foreign currency transactions............. 67,043,506 57,958,127
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... 961,568 (2,695,118)
Net change in unrealized appreciation
(depreciation) of investments............. 19,234,934 (4,582,027)
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 83,710,142 45,032,791
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (27,521,553) --
In excess of net realized gain on
investments............................... -- (1,492,549)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (2,846,079) --
In excess of net realized gain on
investments............................... -- (28,033)
----------------- -----------------
Total distributions...................... (30,367,632) (1,520,582)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,635,173,338 785,204,559
Decrease from capital shares repurchased... (1,668,897,114) (820,493,437)
----------------- -----------------
Net decrease from capital share
transactions............................ (33,723,776) (35,288,878)
----------------- -----------------
Total increase in net assets................. 19,618,734 8,223,331
Net assets:
Beginning of year.......................... 478,040,293 469,816,962
----------------- -----------------
End of year................................ $ 497,659,027 $ 478,040,293
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 134
<PAGE>
GT GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
1995 1994(D) 1993(D) 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income (loss).......... (0.15) (0.22) (0.15) (0.18) 0.03
Net realized and unrealized gain on
investments.......................... 3.73 2.02 0.57 (1.53) 6.78
----------- ----------- ----------- ----------- -----------
Net increase (decrease) from
investment operations.............. 3.58 1.80 0.42 (1.71) 6.81
----------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income............ -- -- -- -- (0.07)
From net realized gain on
investments.......................... (1.34) -- -- (0.14) (0.28)
In excess of net realized gain on
investments.......................... -- (0.06) -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions................. (1.34) (0.06) -- (0.14) (0.35)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total investment return (c)............. 19.79% 10.11% 2.4% (8.9)% 54.2%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 426,380 $ 438,940 $ 461,113 $ 655,867 $ 552,897
Ratio of net investment income (loss) to
average net assets..................... (0.72)% (1.23)% (0.90)% (0.97)% 0.19%
Ratio of expenses to average net assets:
With expense reduction................ 1.85% 1.98% 2.00% 2.05% 2.01%
Without expense reduction............. 1.91% --%* --%* --%* --%*
Portfolio turnover rate++++............. 99% 64% 61% 30% 23%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 135
<PAGE>
GT GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
---------------------------------------- CLASS+++
-------------
YEAR ENDED OCTOBER 31, APRIL 1, 1993 JUNE 1, 1995
TO TO
----------------------- OCTOBER 31, OCTOBER 31,
1995(D) 1994(D) 1993(D) 1995
--------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.46 $ 17.80 $15.59 $18.66
--------- ----------- ------- -------------
Income from investment operations:
Net investment income (loss).......... (0.25) (0.32) (0.14) (0.02)
Net realized and unrealized gain on
investments.......................... 3.69 2.02 2.35 3.24
--------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 3.44 1.70 2.21 3.22
--------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- 0.00
From net realized gain on
investments.......................... (1.34) -- -- 0.00
In excess of net realized gain on
investments.......................... -- (0.04) -- 0.00
--------- ----------- ------- -------------
Total distributions................. (1.34) (0.04) -- 0.00
--------- ----------- ------- -------------
Net asset value, end of period.......... $ 21.56 $ 19.46 $17.80 $21.88
--------- ----------- ------- -------------
--------- ----------- ------- -------------
Total investment return (c)............. 19.17% 9.55% 14.2%(a) 17.10%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $70,740 $39,100 $8,604 $ 539
Ratio of net investment income (loss) to
average net assets..................... (1.22)% (1.73)% (1.40)%(b) (0.22)%(b)
Ratio of expenses to average net assets:
With expense reduction................ 2.35% 2.48% 2.54%(b) 1.35%(b)
Without expense reduction............. 2.41% --%* --%* 1.41%(b)
Portfolio turnover rate++++............. 99% 64% 61% 99%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 136
<PAGE>
GT GLOBAL HEALTH CARE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and 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 earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 137
<PAGE>
GT GLOBAL HEALTH CARE FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." 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 Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 Fund may use options to manage its exposure to the
stock market and to fluctuation in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 138
<PAGE>
GT GLOBAL HEALTH CARE FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $24,415,520
were on loan to brokers. The loans were secured by cash collateral of
$24,944,125. 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, 1995, the Fund received $188,401 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund'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 Fund may focus its investments in certain related health care
industries, subjecting the Fund to greater risk than a fund that is more
diversified.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) 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 securites 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 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
Statement of Additional Information Page 139
<PAGE>
GT GLOBAL HEALTH CARE FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$67,325 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $3,342 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $178,859. 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%, 2.90%, and 1.90% 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $30,660 to G.T. Capital.
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
Statement of Additional Information Page 140
<PAGE>
GT GLOBAL HEALTH CARE FUND
$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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$432,262,470 and $488,668,484, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year.
4. CAPITAL SHARES
At October 31, 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 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; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold................... 78,194,828 $ 1,518,869,435 34,050,013 $ 640,715,739
Shares issued in connection
with reinvestment of
distributions............... 1,197,686 21,103,166 59,903 1,108,216
----------- --------------- ----------- -------------
79,392,514 1,539,972,601 34,109,916 641,823,955
Shares repurchased............ (82,265,383) (1,598,688,749) (37,533,619) (705,605,096)
----------- --------------- ----------- -------------
Net decrease.................. (2,872,869) $ (58,716,148) (3,423,703) $ (63,781,141)
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold................... 4,710,190 $ 92,123,273 7,582,598 $ 143,354,981
Shares issued in connection
with reinvestment of
distributions............... 140,259 2,451,761 1,390 25,623
----------- --------------- ----------- -------------
4,850,449 94,575,034 7,583,988 143,380,604
Shares repurchased............ (3,578,957) $ (70,045,915) (6,058,397) (114,888,341)
----------- --------------- ----------- -------------
Net increase.................. 1,271,492 $ 24,529,119 1,525,591 $ 28,492,263
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
-----------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- ---------------
<S> <C> <C>
Shares sold................... 32,235 $ 625,703
Shares repurchased............ (7,577) (162,450)
----------- ---------------
Net increase.................. 24,658 $ 463,253
----------- ---------------
----------- ---------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $6,478,750,
at value.
Statement of Additional Information Page 141
<PAGE>
GT GLOBAL HEALTH CARE FUND
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $71,525 under these arrangements.
7. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$30,367,632 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 142
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Telecommunications Fund 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 portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended and for the period from 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, 1995 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, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from 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 15, 1995
Statement of Additional Information Page 143
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telecom Equipment (18.8%)
Nokia AB "A" ............................................ FIN 2,452,160 $ 140,430,534 5.7
L.M. Ericsson Telephone Co.: ........................... SWDN -- -- 3.8
ADR{\/} ............................................... -- 3,509,300 74,956,437 --
"B" Free .............................................. -- 871,200 18,518,007 --
ECI Telecommunications Ltd.{\/} ......................... ISRL 3,003,500 57,066,500 2.3
DSC Communications Corp.-/- ............................. US 1,500,000 55,500,000 2.3
ANTEC Corp.{::} -/- ..................................... US 2,068,800 25,601,400 1.0
Mitel Corp.-/- {\/} ..................................... CAN 3,776,000 20,768,000 0.8
Andrew Corp.-/- ......................................... US 465,200 19,654,700 0.8
Spectrian Corp.{::} -/- ................................. US 750,000 16,312,500 0.7
Scientific-Atlanta, Inc. ................................ US 925,000 11,446,875 0.5
Champion Technology Holdings ............................ HK 73,439,163 9,404,073 0.4
BroadBand Technologies, Inc.-/- ......................... US 487,300 8,527,750 0.3
Netas Telekomunik-/- .................................... TRKY 17,820,000 6,166,992 0.2
--------------
464,353,768
--------------
Wireless Communications (16.5%)
DDI Corp. ............................................... JPN 15,049 122,058,712 4.9
Advanced Info. Service - Foreign ........................ THAI 2,386,050 37,934,022 1.5
Shinawatra Computer Company, Ltd.: ...................... THAI -- -- 1.4
Foreign ............................................... -- 1,399,100 34,254,595 --
Local ................................................ -- 31,100 761,431 --
Millicom International Cellular S.A.{::} -/- {\/} ....... LUX 1,057,000 34,881,000 1.4
AirTouch Communications, Inc.-/- ........................ US 1,000,000 28,500,000 1.2
United Communication Industry - Foreign ................. THAI 1,967,800 24,871,240 1.0
Vodafone Group PLC ...................................... UK 5,795,000 23,951,201 1.0
Grupo Iusacell, S.A. de C.V. "L" - ADR-/- {\/} .......... MEX 1,601,900 19,022,563 0.8
Telecom Italia Mobile Di Risp S.p.A.-/- ................. ITLY 16,230,000 17,892,943 0.7
Korea Mobile Telecom-/- ................................. KOR 16,500 15,947,915 0.6
Telecom Italia Mobile S.p.A. ............................ ITLY 8,365,001 14,079,965 0.6
Telephone and Data Systems, Inc. ........................ US 258,500 10,340,000 0.4
Total Access Communication Public Co., Ltd. ............. THAI -- -- 0.4
Common-/- {\/} ........................................ -- 1,125,000 6,806,250 --
144A{.} -/- {\/} ...................................... -- 286,400 1,732,720 --
Rogers Cantel Mobile Communications "B"-/- .............. CAN 382,000 7,950,609 0.3
Tele 2000 S.A.{::} -/- .................................. PERU 6,386,222 6,287,539 0.3
American Satellite Network .............................. US 65,825 -- --
--------------
407,272,705
--------------
Telephone Networks (14.2%)
Nippon Telegraph & Telephone Corp. ...................... JPN 6,120 50,236,572 2.0
Stet Di Risp ............................................ ITLY 16,820,000 36,717,190 1.5
SPT Telecom-/- ......................................... CZCH 368,000 36,244,024 1.5
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ......... MEX 1,246,750 34,285,625 1.4
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 677,800 27,027,275 1.1
Frontier Corp. .......................................... US 1,000,000 27,000,000 1.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 144
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telephone Networks (Continued)
Pakistan Telecommunications Co., Ltd. - 144A GDR{.} -/-
{\/ } ................................................. PAK 225,437 $ 21,078,360 0.9
Telefonica de Argentina S.A. - ADR{\/} .................. ARG 993,000 20,604,750 0.8
Stet Societa' Finanziaria Telefonica S.p.A. ............. ITLY 6,750,000 19,099,856 0.8
Telecom Italia - Di Risp ................................ ITLY 16,230,000 19,064,748 0.8
Telecom Argentina S.A. - ADR{\/} ........................ ARG 387,100 14,854,963 0.6
Telecom Italia S.p.A. ................................... ITLY 8,365,001 12,824,794 0.5
Russian Telecommunications Development Corp.: ........... US -- -- 0.3
Non-Voting(.) -/- ..................................... -- 453,000 4,530,000 --
Voting(.) -/- ........................................ -- 331,000 3,310,000 --
Orient Telecom & Technology Holdings Ltd.-/- ............ HK 24,682,000 7,582,232 0.3
Atlantic Tele-Network, Inc.{::} -/- ..................... US 660,100 7,261,100 0.3
TelecomAsia Corp. - Foreign-/- .......................... THAI 1,257,000 3,846,940 0.2
Jasmine International Public Co., Ltd. - Foreign ........ THAI 560,400 3,207,377 0.1
--------------
348,775,806
--------------
Broadcasting & Publishing (7.8%)
Time Warner, Inc. ....................................... US 1,150,400 41,989,600 1.7
News Corp., Ltd.: ....................................... AUSL -- -- 1.2
Common ............................................... -- 3,824,342 19,278,970 --
Preferred ............................................ -- 1,920,750 8,775,891 --
Pearson PLC ............................................. UK 1,800,000 17,923,186 0.7
Granada Group PLC ....................................... UK 1,500,000 16,050,261 0.7
Evergreen Media Corp. "A"-/- ............................ US 571,100 15,562,475 0.6
Canal Plus .............................................. FR 84,390 14,587,205 0.6
Grupo Televisa, S.A. de C.V. - GDR{\/} .................. MEX 800,000 13,700,000 0.6
Tele-Communications Liberty Media Group, Inc. "A"-/- .... US 531,800 13,095,575 0.5
Sistem Televisyen Malaysia Bhd. ......................... MAL 3,718,000 11,707,932 0.5
EchoStar Communications Corp. "A" ....................... US 605,700 8,782,650 0.4
Home Shopping Network, Inc.-/- .......................... US 568,200 4,616,625 0.2
International Broadcasting Corp., Ltd. - Foreign-/- ..... THAI 1,741,900 3,669,344 0.1
Medya Holding AS ........................................ TRKY 37,932,160 1,220,278 --
--------------
190,959,992
--------------
Cable Television (7.1%)
Comcast Corp. "A" ....................................... US 3,404,300 60,851,863 2.5
Nynex CableComms Group: ................................. UK -- -- 1.5
Units-/- ............................................. -- 15,134,000 30,617,228 --
ADR-/- {\/} ........................................... -- 306,900 6,214,725 --
TCI Group "A"-/- ........................................ US 2,127,200 36,162,400 1.5
Rogers Communications, Inc. "B"-/- ...................... CAN 2,376,400 23,288,472 0.9
Bell Cablemedia PLC - ADR{::} -/- {\/} .................. UK 738,300 10,982,213 0.4
International CableTel, Inc.-/- ......................... US 307,333 8,144,325 0.3
--------------
176,261,226
--------------
Telephone - Regional/Local (3.9%)
MFS Communications Co., Inc.-/- ........................ US 1,924,000 77,681,500 3.1
Intermedia Communications of Florida, Inc.{::} -/- ...... US 873,900 11,032,988 0.4
IntelCom Group, Inc.-/- ................................. US 974,300 10,595,513 0.4
--------------
99,310,001
--------------
Semiconductors (3.8%)
Kyocera Corp. ........................................... JPN 1,151,000 94,368,261 3.8
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 145
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Conglomerates (3.4%)
Grupo Carso, S.A. de C.V. "A1"-/- ...................... MEX 9,745,000 $ 51,051,756 2.1
Hutchison Whampoa ....................................... HK 4,800,000 26,448,675 1.1
Alfa, S.A. de C.V. ...................................... MEX 524,000 5,961,236 0.2
--------------
83,461,667
--------------
Telephone - Long Distance (3.3%)
WorldCom, Inc.-/- ....................................... US 1,107,259 36,124,325 1.5
Call-Net Enterprises, Inc.: ............................ CAN -- -- 0.6
"B"-/- ................................................ -- 1,036,700 8,514,672 --
"A"-/- ................................................ -- 519,400 4,362,913 --
144A{.} -/- ........................................... -- 379,400 3,116,105 --
LCI International, Inc.-/- .............................. US 670,000 12,060,000 0.5
GN Store Nord AS ....................................... DEN 134,166 9,946,773 0.4
Philippine Long Distance Telephone Co. ................. PHIL 86,404 4,822,394 0.2
Petersburg Long Distance, Inc.-/- {\/} ................. RUS 510,000 3,187,500 0.1
--------------
82,134,682
--------------
Telecom Technology (3.2%)
Kyushu-Matsushita Electric Co., Ltd. .................... JPN 2,557,000 40,777,908 1.7
Murata Manufacturing Co., Ltd. .......................... JPN 542,000 19,037,081 0.8
DSP Communications, Inc. ................................ US 361,800 13,115,250 0.5
Dialogic Corp.-/- ....................................... US 200,000 5,800,000 0.2
--------------
78,730,239
--------------
Machinery & Engineering (2.1%)
Mannesmann AG ........................................... GER 160,900 52,970,205 2.1
--------------
Consumer Electronics (2.0%)
Amcol Holdings Ltd. ..................................... SING 10,644,000 23,510,995 1.0
Three-Five Systems, Inc.{::} -/- ........................ US 749,000 13,575,625 0.6
Himachal Futuristic Communications Ltd. - 144A GDR{.} -/-
{\/} ................................................... IND 1,613,000 8,871,500 0.4
--------------
45,958,120
--------------
Office Equipment (1.6%)
Canon Inc. .............................................. JPN 1,600,000 27,394,580 1.1
Olivetti Group-/- ....................................... ITLY 16,413,000 12,324,176 0.5
--------------
39,718,756
--------------
Industrial Components (1.4%)
Oak Industries, Inc.-/- ................................. US 597,800 12,479,075 0.5
Alcatel Cable ........................................... FR 133,813 7,801,310 0.3
BICC PLC ................................................ UK 1,500,000 6,211,475 0.3
PT Kabelmetal Indonesia - Local-/- ...................... INDO 5,100,000 4,718,062 0.2
PT Kabelindo Murni - Local{::} .......................... INDO 4,316,000 1,901,322 0.1
PT Voksel Electronics - Foreign ......................... INDO 1,106,700 1,218,833 --
--------------
34,330,077
--------------
Aerospace/Defense (1.2%)
Orbital Sciences Corp.{::} -/- .......................... US 2,095,500 29,860,875 1.2
--------------
Real Estate (1.0%)
Wharf (Holdings) Ltd. ................................... HK 7,298,000 24,637,547 1.0
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 146
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Multi-Industry (0.9%)
Compagnie Generale des Eaux ............................. FR 142,874 $ 13,283,468 0.5
Tadiran Ltd.{\/} ........................................ ISRL 455,600 9,966,250 0.4
--------------
23,249,718
--------------
Automobiles (0.9%)
Edaran Otomobil Nasional Bhd. ........................... MAL 2,926,000 23,034,836 0.9
--------------
Software (0.9%)
Quarterdeck Corp.-/- .................................... US 1,000,000 21,375,000 0.9
--------------
Value Added Telephone Service (0.8%)
International Engineering PLC - Foreign{::} ............. THAI 3,057,700 14,583,625 0.6
Sapura Telecommunications Bhd. ......................... MAL 4,730,000 5,417,949 0.2
--------------
20,001,574
--------------
Networking (0.3%)
Cisco Systems, Inc.-/- .................................. US 85,000 6,587,500 0.3
--------------
Other Financial (0.2%)
Phatra Thanakit Co., Ltd. - Foreign ..................... THAI 619,500 4,850,616 0.2
--------------
Banks-Regional (0.2%)
Grupo Financiero Banamex Accival, S.A. de C.V. "B" ...... MEX 2,576,000 4,413,933 0.2
--------------
Computers & Peripherals (0.2%)
NEC Corp. ............................................... JPN 300,000 3,962,430 0.2
--------------
Telecom - Other (0.1%)
Radiotronica S.A.{::} -/- .............................. SPN 185,454 1,475,600 0.1
--------------
Retailers-Other (0.0%)
Gran Cadena de Almacenes Colombianos S.A. ............... COL 64,000 71,885 --
Grupo Mexicano de Video - 144A ADR{::} {.} {\/} ......... MEX 122,000 61,000 --
--------------
132,885
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $2,249,438,890) ............ 2,362,188,019 95.8
-------------- -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Structured Notes (0.4%)
Russia (0.4%)
Credit Suisse Synthetic Equity Medium Term Note, 3.25%
due 4/29/97 (This is an equity linked note. The value
of this note is linked to the underlying value of
Rostelecom.) ......................................... USD 7,000,000 8,530,200 0.4
--------------
Corporate Bonds (0.0%)
Malaysia (0.0%)
Sapura Telecommunications Bhd., Convertible Bond, 2%
due 9/14/00 ......................................... MYR 3,547,500 1,064,739 --
-------------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,399,408) .......... 9,594,939 0.4
-------------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 147
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Repurchase Agreement (4.0%) Value Assets {d}
- ----------------------------------------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by:
$99,070,000 U.S. Treasury Bill, due 3/28/96 (market
value of collateral is $96,900,890, including accrued
interest). ........................................... $ 95,015,305 3.8
$4,770,000 U.S. Treasury Bill, due 2/8/96 (market value
of collateral is $4,699,643, including accrued
interest). ........................................... 4,598,741 0.2
-------------- -----
TOTAL REPURCHASE AGREEMENT (cost $99,614,046) ............ 99,614,046 4.0
-------------- -----
TOTAL INVESTMENTS (cost $2,357,452,344) .................. 2,471,397,004 100.2
Other Assets and Liabilities .............................. (5,473,913) (0.2)
-------------- -----
NET ASSETS ............................................... $2,465,923,091 100.0
-------------- -----
-------------- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $2,465,923,091.
-/- Non-income producing security.
{::} See Note 6 of Notes to Financial Statements.
{\/} U.S. currency denominated.
{.} 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.
(.) Restricted securities -- At October 31, 1995, the Fund owned the
following restricted securities constituting 0.3% 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 Market Value
Description Dates Shares Cost Per Share
- --------------------------------------------------------------------------- ----------- ------- ----------- ------------
Russian Telecommunications Development Corporation:
Non-voting............................................................... 12/22/93 453,000 $ 4,530,000 $10.00
Voting................................................................... 12/22/93 331,000 3,310,000 10.00
* For Federal income tax purposes, cost is $2,362,871,101 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 402,432,461
Unrealized depreciation: (293,906,558)
-------------
Net unrealized appreciation: $ 108,525,903
-------------
-------------
</TABLE>
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 148
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 1.4 1.4
Australia (AUSL/AUD) ................. 1.2 1.2
Brazil (BRZL/BRL) .................... 1.1 1.1
Canada (CAN/CAD) ..................... 2.6 2.6
Czech Republic (CZCH/CSK) ........... 1.5 1.5
Denmark (DEN/DKK) .................... 0.4 0.4
Finland (FIN/FIM) .................... 5.7 5.7
France (FR/FRF) ...................... 1.4 1.4
Germany (GER/DEM) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 2.8 2.8
India (IND/INR) ...................... 0.4 0.4
Indonesia (INDO/IDR) ................. 0.3 0.3
Israel (ISRL/ILS) .................... 2.7 2.7
Italy (ITLY/ITL) ..................... 5.4 5.4
Japan (JPN/JPY) ...................... 14.5 14.5
Korea (KOR/KRW) ...................... 0.6 0.6
Luxembourg (LUX/ECU) ................. 1.4 1.4
Malaysia (MAL/MYR) ................... 1.6 1.6
Mexico (MEX/MXN) ..................... 5.3 5.3
Pakistan (PAK/PKR) .................. 0.9 0.9
Peru (PERU/PES) ...................... 0.3 0.3
Philippines (PHIL/PHP) ............... 0.2 0.2
Russia (RUS/SUR) ..................... 0.1 0.4 0.5
Singapore (SING/SGD) ................. 1.0 1.0
Spain (SPN/ESP) ...................... 0.1 0.1
Sweden (SWDN/SEK) .................... 3.8 3.8
Thailand (THAI/THB) .................. 5.5 5.5
Turkey (TRKY/TRL) .................... 0.2 0.2
United Kingdom (UK/GBP) .............. 4.6 4.6
United States (US/USD) ............... 26.7 3.8 30.5
------ --- --- -----
Total ............................... 95.8 0.4 3.8 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $2,465,923,091.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 149
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Contract Price Date (Depreciation)
-------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
French Francs........................................................... 10,584,003 5.06313 11/16/95 $ 364,830
Japanese Yen............................................................ 23,899,325 100.21000 11/08/95 (474,066)
Japanese Yen............................................................ 26,320,810 100.17800 11/08/95 (533,889)
Japanese Yen............................................................ 7,631,347 100.17800 11/08/95 (154,793)
Japanese Yen............................................................ 518,540 97.97300 11/14/95 (22,425)
-------------- -------------
Total Contracts to Buy (Payable amount $69,774,368)................. 68,954,025 (820,343)
-------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 2.80%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
French Francs........................................................... 35,888,057 4.90035 11/16/95 (86,023)
Italian Lira............................................................ 59,513,181 1,605.60000 11/16/95 (465,747)
Japanese Yen............................................................ 50,220,135 90.16900 11/08/95 6,706,303
Japanese Yen............................................................ 43,762,841 96.69750 11/08/95 2,494,818
Japanese Yen............................................................ 72,693,474 89.90000 11/09/95 9,953,912
Japanese Yen............................................................ 72,204,285 91.70000 11/14/95 8,275,542
-------------- -------------
Total Contracts to Sell (Receivable amount $361,160,778)............ 334,281,973 26,878,805
-------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 13.56%
Total Open Forward Foreign Currency Contracts, Net.................. $26,058,462
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 150
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $2,357,452,344)
(Note 1)................................................. $2,471,397,004
U.S. currency.............................. $ 961 --
Foreign currencies (cost $1,379,989)....... 1,426,729 1,427,690
----------
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. 26,058,462
Receivable for securities sold............................ 22,785,737
Receivable for Fund shares sold........................... 7,809,807
Dividends and dividend withholding tax reclaims
receivable............................................... 3,462,722
Receivable for forward foreign currency contracts --
closed (Note 1).......................................... 1,266,060
Interest receivable....................................... 117,769
Unamortized organizational costs.......................... 12,074
Cash held as collateral for securities loaned (Note 1).... 151,557,635
--------------
Total assets............................................ 2,685,894,960
--------------
Liabilities:
Payable for Fund shares repurchased....................... 35,184,262
Payable for securities purchased.......................... 28,518,300
Payable for investment management and administration fees
(Note 2)................................................. 2,043,619
Payable for service and distribution expenses (Note 2).... 1,592,725
Payable for transfer agent fees (Note 2).................. 545,407
Payable for printing and postage expenses................. 322,690
Payable for custodian fees (Note 1)....................... 62,674
Payable for fund accounting fees (Note 2)................. 55,425
Payable for professional fees............................. 39,053
Payable for registration and filing fees.................. 25,202
Payable for Directors' fees and expenses (Note 2)......... 7,904
Other accrued expenses.................................... 16,973
Collateral for securities loaned (Note 1)................. 151,557,635
--------------
Total liabilities....................................... 219,971,869
--------------
Net assets.................................................. $2,465,923,091
--------------
--------------
Class A:
Net asset value and redemption price per share
($1,353,722,073 DIVIDED BY 82,457,608 shares
outstanding)............................................... $ 16.42
--------------
--------------
Maximum offering price per share (100/95.25 of $16.42) *.... $ 17.24
--------------
--------------
Class B:+
Net asset value and offering price per share ($1,111,520,240
DIVIDED BY 68,621,620 shares outstanding).................. $ 16.20
--------------
--------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share ($680,778 DIVIDED BY 41,371 shares
outstanding)............................................... $ 16.46
--------------
--------------
Net assets consist of:
Paid in capital (Note 4).................................. $2,238,611,664
Accumulated net realized gain on investments and foreign
currency transactions.................................... 87,129,699
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies........................ 26,237,068
Net unrealized appreciation of investments................ 113,944,660
--------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $2,465,923,091
--------------
--------------
<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 151
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$2,932,991)................................................. $ 25,666,862
Interest income.............................................. 7,204,936
-------------
Total investment income.................................... 32,871,798
-------------
Expenses:
Investment management and administration fees (Note 2)....... 23,861,460
Service and distribution expenses: (Note 2)
Class A.................................. $ 7,238,541
Class B.................................. 11,199,568 18,438,109
-------------
Transfer agent fees (Note 2)................................. 6,735,000
Custodian fees (Note 1)...................................... 1,462,916
Printing and postage expenses................................ 1,071,067
Fund accounting fees (Note 2)................................ 654,836
Registration and filing fees................................. 101,000
Directors' fees and expenses (Note 2)........................ 43,535
Legal fees................................................... 35,450
Insurance expenses........................................... 33,304
Amortization of organization costs (Note 1).................. 17,750
Audit fees................................................... 13,700
Other expenses............................................... 37,165
-------------
Total expenses before reductions........................... 52,505,292
-------------
Expense reductions (Notes 1 & 7)......................... (1,379,807)
-------------
Total net expenses......................................... 51,125,485
-------------
Net investment loss............................................ (18,253,687)
-------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 139,255,816
Net realized loss on foreign currency
transactions.............................. (26,974,212)
-------------
Net realized gain during the year.......................... 112,281,604
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 20,055,808
Net change in unrealized appreciation of
investments............................... (203,028,268)
-------------
Net unrealized depreciation during the year................ (182,972,460)
-------------
Net realized and unrealized loss on investments and foreign
currencies.................................................... (70,690,856)
-------------
Net decrease in net assets resulting from operations........... $ (88,944,543)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 152
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment (loss)...................... $ (18,253,687) $ (5,008,280)
Net realized gain on investments and
foreign currency transactions............. 112,281,604 137,990,064
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 20,055,808 3,578,825
Net change in unrealized appreciation
(depreciation) of investments............. (203,028,268) 27,259,645
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (88,944,543) 163,820,254
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. -- (1,139,864)
From net realized gain on investments...... (78,594,102) (20,482,527)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. -- (511,428)
From net realized gain on investments...... (58,563,435) (9,209,255)
----------------- -----------------
Total distributions...................... (137,157,537) (31,343,074)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,799,851,047 1,678,630,071
Decrease from capital shares repurchased... (1,936,308,797) (661,298,601)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (136,457,750) 1,017,331,470
----------------- -----------------
Total increase (decrease) in net assets...... (362,559,830) 1,149,808,650
Net assets:
Beginning of year.......................... 2,828,482,921 1,678,674,271
----------------- -----------------
End of year................................ $2,465,923,091 $2,828,482,921
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 153
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
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
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------------- TO OCTOBER 31,
1995 1994(C) 1993 1992
------------ ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.80 $ 16.92 $ 11.16 $ 11.43
------------ ------------- ------------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.09) (0.01) 0.08 0.14*
Net realized and unrealized gain
(loss) on investments................ (0.43) 1.17 5.83 (0.41)
------------ ------------- ------------- -----------------
Net increase (decrease) from
investment operations.............. (0.52) 1.16 5.91 (0.27)
------------ ------------- ------------- -----------------
Distributions to shareholders:
From net investment income............ -- (0.01) (0.15) --
From net realized gain on
investments.......................... (0.86) (0.27) -- --
------------ ------------- ------------- -----------------
Total distributions................. (0.86) (0.28) (0.15) --
------------ ------------- ------------- -----------------
Net asset value, end of period.......... $ 16.42 $ 17.80 $ 16.92 $ 11.16
------------ ------------- ------------- -----------------
------------ ------------- ------------- -----------------
Total investment return (d)............. (2.88)% 7.02% 53.60% (2.40)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,353,722 $1,644,402 $1,223,340 $442,862
Ratio of net investment income (loss) to
average net assets..................... (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to average net assets
With expense reductions (Notes 1 &
7)................................... 1.77% 1.8% 2.0% 2.3%*(b)
Without expense reductions............ 1.83% --%** --%** --%**
Portfolio turnover rate++++............. 62% 57% 41% 4%(b)
</TABLE>
- ----------------
+ 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.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class 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).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charge.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 154
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS+++
---------
CLASS B++ JUNE 1,
--------------------------------------------- 1995
APRIL 1, 1993 TO
YEAR ENDED OCTOBER 31, TO OCTOBER
---------------------------- OCTOBER 31, 31,
1995 1994(C) 1993 1995
------------ ------------- -------------- ---------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.66 $ 16.87 $ 12.68 $15.24
------------ ------------- -------------- ---------
Income from investment operations:
Net investment income (loss).......... (0.17) (0.10) 0.01 0.00
Net realized and unrealized gain
(loss) on investments................ (0.43) 1.17 4.18 1.22
------------ ------------- -------------- ---------
Net increase (decrease) from
investment operations.............. (0.60) 1.07 4.19 1.22
------------ ------------- -------------- ---------
Distributions to shareholders:
From net investment income............ -- (0.01) -- 0.00
From net realized gain on
investments.......................... (0.86) (0.27) -- 0.00
------------ ------------- -------------- ---------
Total distributions................. (0.86) (0.28) -- 0.00
------------ ------------- -------------- ---------
Net asset value, end of period.......... $ 16.20 $ 17.66 $ 16.87 $16.46
------------ ------------- -------------- ---------
------------ ------------- -------------- ---------
Total investment return (d)............. (3.37)% 6.50% 33.00%(a) 7.94%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,111,520 $1,184,081 $455,335 $ 681
Ratio of net investment income (loss) to
average net assets..................... (0.99)% (0.52)% 0.3%(b) 0.01%(b)
Ratio of expenses to average net assets
With expense reductions (Notes 1 &
7)................................... 2.27% 2.3% 2.5%(b) 1.27%(b)
Without expense reductions............ 2.33% --%** --%** 1.33%(b)
Portfolio turnover rate++++............. 62% 57% 41% 62%
</TABLE>
- ----------------
+ 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.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class 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).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charge.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 155
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
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 twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 156
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities". 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
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract a
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange of which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 157
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, securities with an aggregate value of approximately
$137,286,521 were on loan to brokers. The loans were secured by cash collateral
of $151,557,635. 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, 1995, the Fund received $1,141,607 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $88,750. These expenses
are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the 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 Fund may focus its investments in certain related
telecommunication industries, subjecting the Fund to greater risk than a fund
that is more diversified.
(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
Statement of Additional Information Page 158
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$578,450 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $49,798 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $4,770,375. 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%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T.
Statement of Additional Information Page 159
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
Capital ("G.T. Funds") and 0.02% to the assets in excess of $5 billion and
dividing the result by the aggregate assets of the G.T. Funds. For the period
ended October 31, 1995, the Fund paid fund accounting fees of $170,297 to G.T.
Capital.
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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$1,521,325,782 and $1,784,269,521, respectively. There were no purchases or
sales of U.S. government obligations by the Fund for the year ended October 31,
1995.
4. CAPITAL SHARES
At October 31, 1995, 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; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 83,031,164 $ 1,357,464,500 49,183,489 $ 833,820,941
Shares issued in connection with reinvestment of distributions.......... 3,938,085 63,284,987 1,050,827 17,160,181
----------- --------------- ----------- -------------
86,969,249 1,420,749,487 50,234,316 850,981,122
Shares repurchased...................................................... (96,901,218) (1,584,327,366) (30,135,506) (509,780,043)
----------- --------------- ----------- -------------
Net increase (decrease)................................................. (9,931,969) $ (163,577,879) 20,098,810 $ 341,201,079
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 20,348,248 $ 330,809,778 48,594,410 $ 819,697,227
Shares issued in connection with reinvestment of distributions.......... 2,988,078 47,599,706 488,736 7,951,722
----------- --------------- ----------- -------------
23,336,326 378,409,484 49,083,146 827,648,949
Shares repurchased...................................................... (21,776,751) (351,935,028) (9,006,454) (151,518,558)
----------- --------------- ----------- -------------
Net increase............................................................ 1,559,575 $ 26,474,456 40,076,692 $ 676,130,391
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
----------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 44,033 $ 692,076
Shares repurchased...................................................... (2,662) (46,403)
----------- ---------------
Net increase............................................................ 41,371 $ 645,673
----------- ---------------
----------- ---------------
</TABLE>
Statement of Additional Information Page 160
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
5. WRITTEN OPTIONS
The Fund's written options contracts activity for the year ended October 31,
1995, was as follows:
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL AMOUNT
IN USD PREMIUMS
-------------- -----------
<S> <C> <C>
Options outstanding at October 31, 1994........................................................ 300,000,000 $ 8,430,000
Options written................................................................................ 0 0
Options cancelled in closing purchase transactions (loss of $4,965,000 realized)............... (300,000,000) (8,430,000)
Options expired prior to exercise.............................................................. 0 0
Options exercised.............................................................................. 0 0
-------------- -----------
Options outstanding at October 31, 1995........................................................ 0 $ 0
-------------- -----------
-------------- -----------
</TABLE>
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to
$173,816,787, at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ----------------------------------------------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
ANTEC Corp................................................................... $39,881,349 $ 744,751 $ (149,661) $ --
Atlantic Tele-Network, Inc................................................... 216,146 -- -- --
Bell Cablemedia PLC - ADR.................................................... 12,833,179 -- -- --
Grupo Mexicano de Video - 144A ADR........................................... -- -- -- --
Intermedia Communications of Florida, Inc.................................... -- -- -- --
International Engineering PLC - Foreign...................................... 10,064,198 -- -- --
Millicom International Cellular S.A.......................................... 4,175,625 1,186,241 316,004 --
Orbital Sciences Corp........................................................ 11,705,749 809,678 333,306 --
PT Kabelindo Murni - Local................................................... 2,403,079 -- -- 185,052
Radiotronica S.A............................................................. -- 1,291,051 (516,772) --
Spectrian Corp............................................................... 19,582,900 -- -- --
Tele 2000 S.A................................................................ 173,893 -- -- --
Three-Five Systems, Inc...................................................... 17,650,046 -- -- --
</TABLE>
7. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $238,200 under these arrangements.
8. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's investment manager and
administrator, currently named G.T. Capital Management, Inc., will be changed to
"LGT Asset Management, Inc.", and G.T. Global Financial Services, Inc., which
serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.173 per share (representing an approximate total of
$25,368,596). The total amount of taxes paid by the Fund to such countries was
approximately $0.031 per share (representing an approximate total of
$4,523,548).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$79,742,755 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 161
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 162
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 163
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 164
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR INVESTMENT COUNSELOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
G.T. GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
G.T. GLOBAL AMERICA VALUE FUND
Concentrates of equity securities of large cap companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
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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 GT INVESTMENT FUNDS, INC., GT GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, GT GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, GT GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, GT GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
GT GLOBAL HEALTH CARE FUND, GT GLOBAL TELECOMMUNICATIONS FUND, LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON IN SUCH JURISDICTION TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THESX602MC
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GT GLOBAL INCOME FUNDS:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
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This Statement of Additional Information relates to the Advisor Class shares of
the GT Global Government Income Fund ("Government Income Fund"), GT Global
Strategic Income Fund ("Strategic Income Fund") and GT Global High Income Fund
("High Income Fund") (individually, a "Fund," collectively, "Funds"). Each Fund
is a mutual fund organized as a separate non-diversified series of G.T.
Investment Funds, Inc. ("Company"), a registered open-end management investment
company. This Statement of Additional Information, which is not a Prospectus,
supplements and should be read in conjunction with the Funds' current Advisor
Class Prospectus dated February 29, 1996, a copy of which is available without
charge by writing to the above address or by calling the Funds at the toll-free
telephone number listed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the investment
manager and administrator for the Government Income Fund, the Strategic Income
Fund and the Global High Income Portfolio ("Portfolio") and also serves as the
administrator of the High Income Fund. The distributor of the shares of each
Fund is GT Global, Inc. ("GT Global"). The Funds' transfer agent is GT Global
Investor Services, Inc. ("GT Services" or "Transfer Agent").
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TABLE OF CONTENTS
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Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 15
Investment Limitations................................................................................................... 19
Execution of Portfolio Transactions...................................................................................... 23
Directors, Trustees and Executive Officers............................................................................... 25
Management............................................................................................................... 27
Valuation of Fund Shares................................................................................................. 29
Information Relating to Sales and Redemptions............................................................................ 30
Taxes.................................................................................................................... 31
Additional Information................................................................................................... 34
Investment Results....................................................................................................... 35
Description of Debt Ratings.............................................................................................. 42
Financial Statements..................................................................................................... 45
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Statement of Additional Information Page 1
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GT GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVES AND POLICIES
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INVESTMENT OBJECTIVES
The Government Income Fund primarily seeks high current income and secondarily
seeks capital appreciation and protection of principal through active management
of the maturity structure and currency exposure of its portfolio. The Strategic
Income Fund and the High Income Fund primarily seek high current income and
secondarily seek capital appreciation. The High Income Fund seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which, like the High Income Fund, is a non-diversified open-end
management investment company with investment objectives identical to those of
the High Income Fund. Whenever the phrase "all of the Fund's investable assets"
is used herein and in the Prospectus, it means that the only investment
securities that will be held by the High Income Fund will be its interest in the
Portfolio. The High Income Fund may withdraw its investment in the Portfolio at
any time, if the Board of Directors of the Company determines that it is in the
best interests of the Fund and its shareholders to do so. Upon any such
withdrawal, the High Income Fund's assets would be invested in accordance with
the investment policies described below with respect to the Portfolio.
INVESTMENT IN EMERGING MARKETS
The Portfolio seeks its objectives by investing, under normal circumstances, at
least 65% of its total assets in debt securities of issuers in emerging markets.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
of issuers in emerging markets. The Strategic Income Fund and the Portfolio do
not consider the following countries to be emerging markets: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom,
and United States.
In determining what countries constitute emerging markets, LGT Asset Management
will consider, among other things, data, analysis, and classification of
countries published or disseminated by the International Bank for Reconstruction
and Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF DEBT INVESTMENTS
LGT Asset Management is the investment manager of the Government Income Fund,
the Strategic Income Fund and the Portfolio. In determining the appropriate
distribution of investments among various countries and geographic regions for
the Government Income Fund, the Strategic Income Fund and the Portfolio, LGT
Asset Management ordinarily considers the following factors: prospects for
relative economic growth among the different countries in which the Government
Income Fund, the Strategic Income Fund and the Portfolio may invest; expected
levels of inflation; government policies influencing business conditions; the
outlook for currency relationships; and the range of the individual investment
opportunities available to international investors.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in the following types of money market instruments (i.e., debt
instruments with less than 12 months remaining until maturity) denominated in
U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Government Income
Fund, the Strategic Income Fund and the Portfolio may not invest more than 25%
of their respective total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Government Income Fund,
the Strategic Income Fund and the Portfolio presently may be made only by
acquiring shares of other investment companies with local governmental approval
to invest in those countries. At such time as direct investment in these
countries is allowed, the Government Income Fund, the Strategic Income Fund and
the Portfolio anticipate investing directly in these markets. The Government
Income Fund, the Strategic Income Fund and the Portfolio may also invest in the
securities of closed-end investment
Statement of Additional Information Page 2
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GT GLOBAL INCOME FUNDS
companies within the limits of the Investment Company Act of 1940, as amended
("1940 Act"). These limitations currently provide that, in part, a Fund or the
Portfolio may purchase shares of another investment company unless (a) such a
purchase would cause the Government Income Fund, the Strategic Income Fund or
the Portfolio to own in the aggregate more than 3% of the total outstanding
voting securities of the investment company or (b) such a purchase would cause
the Government Income Fund, the Strategic Income Fund or the Portfolio to have
more than 5% of its total assets invested in the investment company or more than
10% of its aggregate assets invested in an aggregate of all such investment
companies. The foregoing limitations do not apply to the investment by the High
Income Fund in the Portfolio. Investment in investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Government Income Fund, the Strategic Income Fund and the
Portfolio do not intend to invest in such investment companies unless, in the
judgment of LGT Asset Management, 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.
SAMURAI AND YANKEE BONDS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai
bonds"), and may invest in dollar-denominated bonds sold in the United States by
non-U.S. issuers ("Yankee bonds"). It is the policy of the Government Income
Fund, the Strategic Income Fund and the Portfolio to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Government Income Fund, the Strategic
Income Fund or the Portfolio in connection with other securities or separately
and provide a Fund or the Portfolio with the right to purchase at a later date
other securities of the issuer. As a condition of its continuing registration in
a state, the Government Income Fund, the Strategic Income Fund and the Portfolio
each 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 ("NYSE"). Warrants or
rights acquired by the Government Income Fund, the Strategic Income Fund or the
Portfolio in units or attached to securities will be deemed to be without value
for purpose of this restriction. These limits are not fundamental policies of
the Government Income Fund, the Strategic Income Fund or the Portfolio and may
be changed by a vote of a majority of the Company's Board of Directors or the
Portfolio's Board of Trustees without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Strategic Income Fund or the
Portfolio may make secured loans of portfolio securities amounting to not more
than 30% of its total assets. Securities loans are made to broker/dealers or
institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the value
of the securities lent plus any accrued interest, "marked to market" on a daily
basis. The collateral received will consist of cash, U.S. short-term government
securities, bank letters of credit or such other collateral as may be permitted
under the Strategic Income Fund's or the Portfolio's investment program and by
regulatory agencies and approved by the Company's Board of Directors. While the
securities loan is outstanding, the Strategic Income Fund and the 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. The Strategic Income Fund and the
Portfolio each will have a right to call each loan and obtain the securities on
five business days' notice. The Government Income Fund, the Strategic Income
Fund and the Portfolio will not have the right to vote equity securities while
they are lent, but each 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 be made only to firms deemed by
LGT Asset Management to be of good standing and will not be made unless, in the
judgment of LGT Asset Management, the consideration to be earned from such loans
would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Strategic Income Fund's and the 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, however, may be
limited by the terms of a specific obligation and by government regulation. As
with investment in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the the Strategic Income Fund and the Portfolio to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although the Strategic Income Fund and the Portfolio typically will
acquire obligations issued and supported by the credit of U.S. or
Statement of Additional Information Page 3
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GT GLOBAL INCOME FUNDS
foreign banks having total assets at the time of purchase in excess of $1
billion, this $1 billion figure is not an investment policy or restriction of
either Fund or the 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
The Government Income Fund, the Strategic Income Fund and the Portfolio may
enter into repurchase agreements. Repurchase agreements are transactions in
which the Fund or Portfolio buys 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 Funds or Portfolio if the other party to
the repurchase agreement becomes bankrupt, the Government Income Fund, the
Strategic Income Fund and the Portfolio intend to enter into repurchase
agreements only with banks and broker/dealers believed by LGT Asset Management
to present minimal credit risks in accordance with guidelines approved by the
Company's Board of Directors. The term "Company's Board of Directors" as used
herein shall refer to the Board of Directors of the Company and the Board of
Trustees of the Portfolio, as applicable. LGT Asset Management reviews and
monitors the creditworthiness of such institutions under the Board's general
supervision.
The Government Income Fund, the Strategic Income Fund and the Portfolio will
invest only in repurchase agreements collateralized at all times in an amount at
least equal to the repurchase price plus accrued interest. To the extent that
the proceeds from any sale of such collateral upon a default in the obligation
to repurchase were less than the repurchase price, the Government Income Fund,
the Strategic Income Fund or the 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 the Government Income Fund, the Strategic Income
Fund's or the Portfolio's ability to sell the collateral and the Government
Income Fund, the Strategic Income Fund or the Portfolio could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, the Government Income Fund,
the Strategic Income Fund and the Portfolio intend to comply with provisions
under such Code that would allow the immediate resale of such collateral. The
Government Income Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the value of
its total assets would be invested in such repurchase agreements and other
illiquid investments and securities for which no readily available market
exists.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Government Income Fund's borrowings will not exceed 30% of the Fund's total
assets, i.e., the Fund's total assets at all times will equal at least 300% of
the amount of outstanding borrowings. If market fluctuations in the value of the
Fund's portfolio holdings or other factors cause the ratio of the Fund's total
assets to outstanding borrowings to fall below 300%, within three days
(excluding Sundays and holidays) of such event the Fund may be required to sell
portfolio securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Strategic Income
Fund's and the Portfolio's borrowings will not exceed 33 1/3% of the Strategic
Income Fund's or the Portfolio's, respective total assets. The Government Income
Fund, the Strategic Income Fund and the Portfolio each may borrow up to 5% of
its respective total assets for temporary or emergency purposes other than to
meet redemptions. Any borrowing by a Fund or the Portfolio may cause greater
fluctuation in the value of its shares than would be the case if the Fund or the
Portfolio did not borrow.
The Government Income Fund's, the Strategic Income Fund's and the Portfolio's
fundamental investment limitations permit it to borrow money for leveraging
purposes. The Government Income Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by a
vote of a majority of the Company's Board of Directors. The Strategic Income
Fund and Portfolio may borrow for leveraging purposes. In the event that the
Strategic Income Fund or the Portfolio employs leverage, it would be subject to
certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in the Fund's
or the Portfolio's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Government Income Fund's, the Strategic Income Fund's or the Portfolio's
earnings or net asset value will increase faster than otherwise would be the
case; conversely, if such income and gains fail to exceed such costs, the Fund's
or the Portfolio's earnings or net asset value would decline faster than would
otherwise be the case.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
enter into reverse repurchase agreements. A reverse repurchase agreement is a
borrowing transaction in which a Fund or the Portfolio transfers possession of
Statement of Additional Information Page 4
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GT GLOBAL INCOME FUNDS
a security to another party, such as a bank or broker/dealer, in return for
cash, and agrees to repurchase the security in the future at an agreed upon
price, which includes an interest component. The Government Income Fund, the
Strategic Income Fund and the Portfolio also may engage in "roll" borrowing
transactions which involve a Fund's or the Portfolio's sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which a Fund or the Portfolio may receive a fee) to purchase
similar, but not identical, securities at a future date. The Government Income
Fund, the Strategic Income Fund and the 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
The Government Income Fund, the Strategic Income Fund and the Portfolio are
authorized to make short sales of securities, although they have no current
intention of doing so. A short sale is a transaction in which a Fund or the
Portfolio sells a security in anticipation that the market price of that
security will decline. The Government Income Fund, the Strategic Income Fund and
the Portfolio may make short sales as a form of hedging to offset potential
declines in long positions in securities it owns, or anticipates acquiring, and
in order to maintain portfolio flexibility. The Government Income Fund, the
Strategic Income Fund and the Portfolio only may make short sales "against the
box." In this type of short sale, at the time of the sale, the Fund or the
Portfolio owns the security it has sold short or has the immediate and
unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Government
Income Fund, the Strategic Income Fund or the Portfolio will deposit in a
separate account with its custodian an equal amount of the securities sold short
or securities convertible into or exchangeable for such securities at no cost.
The Government Income Fund, the Strategic Income Fund or the Portfolio could
close out a short position by purchasing and delivering an equal amount of the
securities sold short, rather than by delivering securities already held by the
Fund or the Portfolio, because the Fund or the Portfolio might want to continue
to receive interest and dividend payments on securities in its portfolio that
are convertible into the securities sold short.
The Government Income Fund, the Strategic Income Fund and the Portfolio might
make a short sale "against the box" in order to hedge against market risks when
LGT Asset Management believes that the price of a security may decline, causing
a decline in the value of a security owned by the Government Income Fund, the
Strategic Income Fund or the Portfolio or a security convertible into or
exchangeable for such security, or when LGT Asset Management wants to sell the
security the Fund or the Portfolio owns at a current attractive price, but also
wishes to defer recognition of gain or loss for federal income tax purposes and
for purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code of 1986, as amended (the "Code"). In
such case, any future losses in the Government Income Fund's, the Strategic
Income Fund's Fund or the Portfolio's long position should be reduced by a gain
in the short position. Conversely, any gain in the long position should be
reduced by a loss in the short position. The extent to which such gains or
losses in the long position are reduced will depend upon the amount of the
securities sold short relative to the amount of the securities the Fund or the
Portfolio owns, either directly or indirectly, and, in the case where a Fund or
the Portfolio owns convertible securities, changes in the investment values or
conversion premiums of such securities. There will be certain additional
transaction costs associated with short sales "against the box," but a Fund or
the Portfolio will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.
Statement of Additional Information Page 5
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GT GLOBAL INCOME FUNDS
OPTIONS, FUTURES AND CURRENCY STRATEGIES
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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 LGT Asset
Management'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 LGT Asset Management is
experienced in the use of these instruments, there can be no assurance that
any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund or the Portfolio
entered into a short hedge because LGT Asset Management projected a decline
in the price of a security in the Fund's or the 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 Fund or the
Portfolio could suffer a loss. In either such case, the Fund or the
Portfolio would have been in a better position had it not hedged at all.
(4) As described below, a Fund or the 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 a Fund or
the Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's or the Portfolio's ability to sell a portfolio security or
make an investment at a time when it would otherwise be favorable to do so,
or require that the Fund or the Portfolio sell a portfolio security at a
disadvantageous time. The Fund's or the Portfolio's ability to close out a
position in an instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a market,
the ability and willingness of the other party to the transaction ("contra
party") to enter into a transaction closing out the position. Therefore,
there is no assurance that any position can be closed out at a time and
price that is favorable to the Fund or the Portfolio.
WRITING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund and the 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
LGT Asset Management 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 Government Income Fund, the Strategic Income Fund and the Portfolio.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such
Statement of Additional Information Page 6
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GT GLOBAL INCOME FUNDS
earlier time at which the writer effects a closing purchase transaction by
purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with a
Fund's or the Portfolio's investment objectives. When writing a call option, the
Government Income Fund, the Strategic Income Fund or the 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 Fund or the
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 Fund or the Portfolio has
written expires, the Fund or the Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Fund or the 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. The Government Income Fund, the Strategic Income
Fund and the Portfolio do not consider a security or currency covered by a call
option to be "pledged" as that term is used in the Government Income Fund's, the
Strategic Income Fund's and the Portfolio's fundamental investment policy that
limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund or the Portfolio will
be obligated to sell the security or currency at less than its market value.
The premium that the Government Income Fund, the Strategic Income Fund or the
Portfolio receives for writing a call option is deemed to constitute the market
value of an option. The premium a Fund or the 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, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Government Income
Fund, the Strategic Income Fund or the Portfolio to write another call option on
the underlying security or currency with either a different exercise price,
expiration date or both.
The Government Income Fund, the Strategic Income Fund and the Portfolio will pay
transaction costs in connection with the writing of options and in entering into
closing purchase contracts. Transaction costs relating to options activity
normally are higher than those applicable to purchases and sales of portfolio
securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund or the 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 Fund or the 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 Fund or the Portfolio.
WRITING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the 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 Fund or the Portfolio generally would write put options in circumstances where
LGT Asset Management wishes to purchase the underlying security or currency for
the Fund's or the Portfolio's portfolio at a price lower than the current
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market price of the security or currency. In such event, the Fund or the
Portfolio would write a put option at an exercise price that, reduced by the
premium received on the option, reflects the lower price it is willing to pay.
Since the Fund or the Portfolio also would receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premiums received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund or the Portfolio
will be obligated to purchase the security or currency at greater than its
market value.
PURCHASING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
purchase put options on securities, indices and currencies. As the holder of a
put option, the Government Income Fund, the Strategic Income Fund or the
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. The Government Income Fund, the Strategic Income Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
A Fund or the Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund or the Portfolio as a hedging
technique in order to protect against an anticipated decline in the value of the
security or currency. Such hedge protection is provided only during the life of
the put option when the Fund or the 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 LGT Asset
Management 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 eventually is sold.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase put options at a time when that Fund or the Portfolio does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund or the 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 Fund or the Portfolio will lose its
entire investment in the put option. In order for the purchase of a put option
to be profitable, the market price of the underlying security or currency must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund or the Portfolio may
purchase call options on securities, indices and currencies. As the holder of a
call option, a Fund or the 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 Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
Call options may be purchased by a Fund or the 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 the Fund or the
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 also may be useful to a Fund or the
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, a Fund or the 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.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase call options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A call option
could be purchased for this purpose where tax considerations make it inadvisable
to realize such gains through a closing purchase transaction. Call options also
may be purchased at times to avoid realizing losses that would result in a
reduction
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of a Fund's or the Portfolio's current return. For example, where a Fund or the
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 the Fund or the Portfolio, an increase in the market price could
result in the exercise of the call option written by the Fund or the Portfolio
and the realization of a loss on the underlying security or currency.
Accordingly, the Fund or the Portfolio could purchase a call option on the same
underlying security or currency, which could be exercised to fulfill the Fund's
or the Portfolio's delivery obligations under its written call (if it is
exercised). This strategy could allow the Fund or the Portfolio to avoid selling
the portfolio security or currency at a time when it has an unrealized loss;
however, the Fund or the Portfolio would have to pay a premium to purchase the
call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's
or the Portfolio's total assets at the time of purchase.
The Government Income Fund, the Strategic Income Fund or the 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 a
Fund or the 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 of the option. A call option gives
a Fund or the 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 of the option. A Fund or
the 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 the Fund or the 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 the Fund or the 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. The Funds and the Portfolio will not purchase an OTC option unless the
Fund or the Portfolio believes that daily valuations for such options are
readily obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of an average of the last bid prices obtained from dealers,
unless a quotation from only one dealer is available, in which case only that
dealer's price will be used. In the case of OTC options, there can be no
assurance that a liquid secondary market will exist for any particular option at
any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Fund or the Portfolio may also sell OTC
options and, in connection therewith, segregate assets or cover its obligations
with respect to OTC options written by the Fund or the Portfolio. The assets
used as cover for OTC options written by a Fund or the Portfolio will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund or the Portfolio may repurchase any OTC option it writes at
a maximum price to be calculated by a formula set forth in the option agreement.
The cover for an OTC option written subject to this procedure would be
considered illiquid only to the extent that the maximum repurchase price under
the formula exceeds the intrinsic value of the option.
A Fund's or the Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
and the 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 each Fund and the Portfolio will enter into OTC options
only with contra parties that are expected to be capable of entering into
closing transactions with the Fund or the Portfolio, there is no assurance that
the Fund or the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of insolvency of
the contra party, the Fund or the Portfolio might be unable to close out an OTC
option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund or the Portfolio
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, the
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purchaser of the call, upon exercise of the call, will receive from the Fund or
the Portfolio an amount of cash if the closing level of the index upon which the
call is based is greater than the exercise price of the call. The amount of cash
is equal to the difference between the closing price of the index and the
exercise price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When a Fund
or the Portfolio buys a call on an index, it pays a premium and has the same
rights as to such calls as are indicated above. When a Fund or the 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 Fund's or the
Portfolio's exercise of the put, to deliver to the Fund or the Portfolio an
amount of cash if the closing level of the index upon which the put is based is
less than the exercise price of the put, which amount of cash is determined by
the multiplier, as described above for calls. When a Fund or the 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 Fund or the Portfolio to deliver to
it an amount of cash equal to the difference between the closing level of the
index and the exercise price times the multiplier, if the closing level is less
than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund or the
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 Fund or the 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 Fund or the
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 Fund or the 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 Fund or the Portfolio, as the
call writer, will not know that it has been assigned until the next business day
at the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Fund or the 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 Fund or the Portfolio will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into interest rate or currency futures contracts, including futures contracts on
indices of debt securities, ("Futures" or "Futures Contracts"), as a hedge
against changes in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective return on securities
or currencies held or intended to be acquired by the Fund or the Portfolio. The
Government Income Fund, the Strategic Income Fund's or the Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates or decreases in currency exchange rates, and
purchases of Futures as an offset against the effect of expected declines in
interest rates or increases in currency exchange rates.
The Government Income Fund's, the Strategic Income Fund and the Portfolio only
will enter into Futures Contracts which 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.
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Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's or the Portfolio's exposure to interest rate and
currency exchange rate fluctuations, a Fund or the Portfolio may be able to
hedge 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 (debt
security or currency) for a specified price at a designated date, time and
place. An index Futures Contract provides for the delivery, at a designated
date, time and place, of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of trading on the
contract and the price at which the Futures Contract is originally struck; no
physical delivery of the securities comprising the index is made. Brokerage fees
are incurred when a Futures Contract is bought or sold, and margin deposits must
be maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a gain; if it is more, the
Government Income Fund, the Strategic Income Fund or the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Government Income Fund, the Strategic Income Fund or the
Portfolio realizes a gain; if it is less, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a loss. The transaction costs
also must be included in these calculations. There can be no assurance, however,
that a Fund or the Portfolio will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at a particular time.
If a Fund or the Portfolio is not able to enter into an offsetting transaction,
the Fund or the Portfolio will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one 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 Government
Income Fund, the Strategic Income Fund or the Portfolio.
The Government Income Fund, the Strategic Income Fund's and the 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 the Fund or the Portfolio owns, or Futures Contracts will be
purchased to protect the Fund or the 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 the Government Income Fund, the Strategic Income Fund or the
Portfolio in order to initiate Futures trading and to maintain the Fund's or the
Portfolio's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure a
Fund's or the Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded, and may be modified significantly from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund or the 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
valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's or the
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
Futures and for securities 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.
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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 occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund or the 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 Fund or the
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Fund or the
Portfolio would continue to be required to make daily variation margin payments
and might be required to maintain the position being hedged by the Future or
option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities 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 can serve as a short hedge. Writing call options on
Futures can serve as a limited short hedge, and writing put options on Futures
can serve as a limited long hedge, using a strategy similar to that used for
writing options on securities, foreign currencies or indices.
If a Fund or the 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 Fund or the 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.
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LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund or the 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 Fund's or the
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Fund or the Portfolio has entered into.
In general, a call option on a Futures Contract is "in-the-money" if the value
of the underlying Futures Contract exceeds the strike, I.E., exercise, price of
the call; a put option on a Futures Contract is "in-the-money" if the value of
the underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by the Company's Board of Directors or the Portfolio's
Board of Trustees, as applicable, without a shareholder vote. This limitation
does not limit the percentage of the Fund's or the Portfolio's assets at risk to
5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The
Government Income Fund, the Strategic Income Fund and the Portfolio either may
accept or make delivery of the currency at the maturity of the Forward Contract.
A Fund or the 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 Fund or the Portfolio engages in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. A Fund or the
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 Fund or the 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, the Funds or
the 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. The Government Income Fund, the Strategic Income Fund or
the 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 Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable.
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into Forward Contracts either with respect to specific transactions or with
respect to the overall investment of the Fund or the 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 the Fund or the
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 Fund or the 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 Fund or the 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 the Fund or the Portfolio to
sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund or the
Portfolio to sell a currency, the Fund or the Portfolio either may sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund or the
Portfolio will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, the Fund or the 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. The Fund or the 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 Fund or the 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 usually are
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate
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GT GLOBAL INCOME FUNDS
fluctuations in the prices of the underlying securities the Fund or the
Portfolio owns or intends to acquire, but it does establish a rate of exchange
in advance. In addition, while Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, they also limit any potential
gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund or the 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 Fund's or the Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that the Fund or the
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 Fund or the 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 Fund or the 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 LGT Asset Management
believes will have a positive correlation to the value of the currency being
hedged. The risk that movements in the price of the contract will not correlate
perfectly with movements in the price of the currency being hedged is magnified
when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund or the 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 Fund or the 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 Fund or the Portfolio has purchased) expose the Fund or the
Portfolio to an obligation to another party. A Fund or the 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 Fund and the 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.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's or the Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Fund's or the Portfolio's ability to
meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund and the Portfolio usually will enter into interest
rate swaps on a net basis, that is, the two payment streams are netted out in a
cash settlement on the payment date or dates specified in the instrument, with
the Strategic Income Fund or the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments.
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GT GLOBAL INCOME FUNDS
The net amount of the excess, if any, of each of the Strategic Income Fund's and
the Portfolio's obligations over its entitlements with respect to each swap will
be accrued on a daily basis and an amount of cash, U.S. government securities or
other liquid high grade debt obligations having an aggregate net asset value at
least equal to the accrued excess will be maintained in an account by a
custodian that satisfies the requirements of the 1940 Act. The Strategic Income
Fund and the Portfolio will also establish and maintain such segregated accounts
with respect to its total obligations under any swaps that are not entered into
on a net basis and with respect to any caps or floors that are written by that
Fund or the Portfolio. LGT Asset Management, the Strategic Income Fund and the
Portfolio believe that swaps, caps and floors do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's and the Portfolio's borrowing restrictions. The Strategic
Income Fund and the Portfolio will not enter into any swap, cap, floor, collar
or other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's ("S&P") or has an equivalent rating from a
nationally recognized statistical rating organization or is determined to be of
equivalent credit quality by LGT Asset Management. If a counterparty defaults,
the Strategic Income Fund or the Portfolio may have contractual remedies
pursuant to the agreements related to the transactions. The swap market has
grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps, floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed and, for that reason, they are
less liquid than swaps.
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RISK FACTORS
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SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. The Strategic Income Fund
and the Portfolio may invest in debt securities in emerging markets. Investing
in securities in emerging countries may entail greater risks than investing in
debt securities in developed countries. These risks include (i) less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price volatility; (iii) certain
national policies which may restrict the Strategic Income Fund's and the
Portfolio's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; and (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, either a
Fund or the Portfolio could lose its entire investment in any such country.
An investment in the Strategic Income Fund and the Portfolio is subject to the
political and economic risks associated with investments in emerging markets.
Even though opportunities for investment may exist in emerging markets, any
change in the leadership or policies of the governments of those countries or in
the leadership or policies of any other government which exercises a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and thereby
eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of emerging market countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund and the Portfolio.
The claims of property owners against
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GT GLOBAL INCOME FUNDS
those governments were never finally settled. There can be no assurance that any
property represented by securities purchased by the Fund or the Portfolio will
not also be expropriated, nationalized, or otherwise confiscated. If such
confiscation were to occur, the Fund or the Portfolio could lose a substantial
portion of its investments in such countries. The Fund's and the Portfolio's
investments would similarly be adversely affected by exchange control regulation
in any of those countries.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund or the 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 the Fund's or the
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 Fund or the
Portfolio invests and adversely affect the value of the Fund's or the
Portfolio's assets.
ILLIQUID SECURITIES. The Government Income Fund may invest up to 10% of its
total assets in securities the disposition of which may be subject to legal or
contractual restrictions or the markets for which may be illiquid. The Strategic
Income Fund and the Portfolio each may invest up to 15% of total assets in
illiquid securities. Securities may be considered illiquid if a Fund or the
Portfolio cannot reasonably expect within seven days to sell the security for
approximately the amount at which the Fund or the Portfolio values such
securities. The sale of illiquid securities, if they can be sold at all,
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than will the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities, which may
be illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell and the time the Theme Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Theme Portfolio might
obtain a less favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchsaing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to LGT Asset Management in accordance with
procedures approved by the Company's Board of Directors. LGT Asset Management
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
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GT GLOBAL INCOME FUNDS
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). LGT Asset
Management will monitor the liquidity of securities held by each Fund and the
Portfolio and report periodically on such decisions to the Board of Directors.
Moreover, as noted in the Prospectus, certain securities, such as those subject
to registration restrictions of more than seven days, will generally be treated
as illiquid.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Government Income Fund,
the Strategic Income Fund or the Portfolio. These restrictions or controls may
at times limit or preclude investment in certain securities and may increase the
cost and expenses of a Fund or 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 may limit the investment by foreign persons to only a specific class
of securities of a company that may have less advantageous terms than securities
of the company available for purchase by nationals. Moreover, the national
policies of certain countries may restrict investment opportunities in issuers
or industries deemed sensitive to national interests. In addition, some
countries require governmental approval for the repatriation of investment
income, capital or the proceeds of securities sales by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose restrictions on foreign capital remittances
abroad. The Government Income Fund, the Strategic Income Fund or the 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 the Government
Income Fund, the Strategic Income Fund or the 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 the
Government Income Fund, the Strategic Income Fund and the 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, LGT Asset Management will take appropriate steps to evaluate the
proposed investment, which may include on-site inspection of the issuer,
interviews with its management and consultations with accountants, bankers and
other specialists. There is substantially less publicly available information
about foreign companies than there are reports and ratings published about U.S.
companies and the U.S. Government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Funds and the Portfolio, under normal
circumstances, will invest substantial portions of their 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 each Fund's and the 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 each Fund's and the Portfolio's
holdings of securities and cash denominated in such currency and, therefore,
will cause an overall decline in the Fund's and the Portfolio's net asset value
and any net investment income and capital gains to be distributed in U.S.
dollars to shareholders of the Fund and the Portfolio. Moreover, if the value of
the foreign currencies in which a Fund receives its income declines relative to
the U.S. dollar between the receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Funds and the Portfolio value their assets daily in terms of U.S.
dollars, the Funds and the Portfolio do not intend to convert holdings of
foreign currencies into U.S. dollars on a daily basis. The Funds will do so from
time to time,
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GT GLOBAL INCOME FUNDS
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference ("spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., 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 a Fund or the Portfolio are
uninvested and no return is earned thereon. The inability of a Fund or the
Portfolio to make intended security purchases due to settlement problems could
cause it to miss attractive opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund or
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Fund or the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser. LGT Asset Management will
consider such difficulties when determining the allocation of each Fund's or the
Portfolio's assets, although LGT Asset Management does not believe that such
difficulties will have a material adverse effect on the Funds' or the
Portfolio's portfolio trading activities.
The Funds and the Portfolio may use foreign custodians, which may involve risks
in addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' and the Portfolio's investments;
and (iii) possible difficulties in obtaining and enforcing judgments against
such custodians.
WITHHOLDING TAXES. Each Fund's and the Portfolio's net investment income
from foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing the Fund's and the 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,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and
the United Kingdom) eliminated certain import tariffs and quotas and other trade
barriers with respect to one another over the past several years. LGT Asset
Management 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 program on the
securities owned by the Funds or the Portfolio.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by a Fund or the Portfolio in Japan means that the Fund or the
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.
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GT GLOBAL INCOME FUNDS
INVESTMENT LIMITATIONS
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Each Fund and the Portfolio has adopted the following investment limitations as
fundamental policies which may not be changed without approval by the holders of
the lesser of (i) 67% of that Fund's shares or the total beneficial interests of
the Portfolio represented at a meeting at which more than 50% of the outstanding
shares of the Fund or the total beneficial interests of the Portfolio are
represented, or (ii) more than 50% of the outstanding shares of the Fund or the
total beneficial interests of the Portfolio. Whenever the High Income Fund is
requested to vote on a change in the investment limitations of the Portfolio,
the Fund will hold a meeting of its shareholders and will cast its votes as
instructed by its shareholders.
GOVERNMENT INCOME FUND
The Government Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts ("REITs"), and may purchase or sell currencies
(including forward currency exchange contracts), futures contracts and
related options generally as described in the Prospectus and Statement of
Additional Information and subject to (14) below;
(4) Acquire securities subject to restrictions on disposition of
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase over-the-counter options or hold assets set aside to cover
over-the-counter options written by a Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of
the Fund's total assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(8) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (14) below;
(9) Borrow money, except from banks for temporary or emergency purposes
not in excess of 30% of the value of the Fund's total assets. The Fund will
not purchase securities while such borrowings are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will reduce, within three days (excluding Sundays
and holidays), the amount of its borrowings in order to provide for the 300%
asset coverage;
(10) 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;
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GT GLOBAL INCOME FUNDS
(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(12) 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;
(13) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(14) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund and the Portfolio intend to comply with the SEC staff positions
that securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of the Government Income Fund are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors without shareholder approval. The Fund may not: (i) borrow
money to purchase securities; and (ii) invest in securities of an issuer if the
investment would cause the Fund to own more than 10% of any class of securities
of any one issuer.
STRATEGIC INCOME FUND
The Strategic Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund) except that this limitation shall not apply to securities issued
or guaranteed as to principal and interest by the U.S. Government or any of
its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund);
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts (REITs), and may purchase or sell currencies
(including forward currency exchange contracts), futures contracts and
related options generally as described in the Prospectus and Statement of
Additional Information and subject to (13) below;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(5) Make loans, except that the Fund may invest in loans and
participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (13) below;
(8) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). This restriction shall not prevent the Fund from
entering into reverse repurchase agreements and engaging in "roll"
transactions, provided that reverse repurchase agreements, "roll"
transactions and any other transactions constituting borrowing by the Fund
may not exceed one-third of the Fund's total assets. In the event that the
asset coverage for the Fund's borrowings falls below 300%, the Fund will
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL INCOME FUNDS
300% asset coverage. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(9) 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;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(11) 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 (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives, policies, and limitations as
the Fund);
(12) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(13) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies are not fundamental policies and may be
changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in
securities of an issuer if the investment would cause the Fund to own more
than 10% of any class of securities of any one issuer (provided, however,
that the Fund may invest all of its investable assets in an open-end
management investment company with substantially the same investment
objectives, policies, and limitations as the Fund.); and
(3) Invest more than 10% of its total assets in shares of other
investment companies and 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 (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives, policies, and
limitations as the Fund).
HIGH INCOME FUND AND GLOBAL HIGH INCOME PORTFOLIO
The High Income Fund and the Global High Income Portfolio each may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund) except that this
limitation shall not apply to securities issued or guaranteed as to
principal and interest by the U.S. Government or any of its agencies or
instrumentalities;
(2) Purchase or sell real estate, including real estate limited
partnerships, provided that the Fund and the Portfolio may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund and the 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
transactions in foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund and the
Portfolio may be deemed an underwriter under federal or state securities
laws;
(5) Make loans, except that the Fund and the Portfolio may invest in
loans and participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL INCOME FUNDS
(6) Purchase securities on margin, provided that the Fund and the
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 the use of options, futures contracts,
options thereon or forward currency contracts. The Fund and the Portfolio
may make deposits of margin in connection with futures and forward contracts
and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's or the Portfolio's
total assets (including the amount borrowed), less all liabilities and
indebtedness (other than borrowing). This restriction shall not prevent the
Fund or the Portfolio from entering into reverse repurchase agreements and
engaging in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the Fund or the Portfolio may not exceed one-third of the
Fund's or the Portfolio's respective total assets. In the event that the
asset coverage for the Fund's or the Portfolio's borrowings falls below
300%, the Fund or the Portfolio will reduce, within three days (excluding
Sundays and holidays), the amount of its borrowings in order to provide for
300% asset coverage. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's or the
Portfolio's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund or the Portfolio may
invest in securities of companies that engage in these activities; or
(10) With respect to 50% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer (provided, however, that the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objectives as the
Fund).
For purposes of the Fund's and the Portfolio's concentration policy contained in
limitation (1) above, the Fund and the Portfolio intend to comply with the SEC
staff positions that securities issued or guaranteed as to principal and
interest by any single foreign government or any supranational organizations in
the aggregate are considered to be securities of issuers in the same industry.
The following investment policies of the Fund and the Portfolio are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors or the Portfolio's Board of Trustees without shareholder
approval. The Fund and the Portfolio may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund or the Portfolio to own more than 10% of any class of securities of any
one issuer (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(3) Purchase or retain the securities of any issuer, if, to the Fund's
or the Portfolio's knowledge, one or more of the officers or Directors of
the Company, the Fund's or the Portfolio's investment adviser, or
distributor, each own beneficially more than 1/2 of 1% of the securities of
such issuer and together own beneficially more than 5% of the securities of
such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's or the Portfolio's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund or the Portfolio has entered into;
(5) 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 (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund); or
(6) Invest more than 10% of its total assets in shares of other
investment companies and 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
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL INCOME FUNDS
investment company (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund).
The High Income Portfolio will comply with all state securities laws in any
states in which the shares of the High Income Fund or any other investor, if
any, in the Portfolio are registered for sale. Investors should refer to the
Prospectus for further information with respect to each Fund's investment
objectives, which may not be changed without the approval of the shareholders
and the Portfolio's investment objectives, which may be changed without the
approval of investors in the Portfolio, and other investment policies and
techniques, which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Government Income and
Strategic Income Funds' and the Portfolio's portfolio transactions and the
selection of broker/dealers that execute such transactions on behalf of these
Funds and the Portfolio. In executing portfolio transactions, LGT Asset
Management seeks the best net results for the Government Income and Strategic
Income Funds and the 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 LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Funds and the Portfolio may
engage in soft dollar arrangements for research services, as described below,
neither the Funds nor the Portfolio has any obligation to deal with any
broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
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 the interests of the Funds and the Portfolio, LGT Asset
Management may select brokers to execute the Funds' and the Portfolio's
portfolio transactions on the basis of the research and brokerage services they
provide to LGT Asset Management for its use in managing the Funds and the
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 brokers are in addition to, and not in
lieu of, the services required to be performed by LGT Asset Management under the
Management Contract (defined below). A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that LGT Asset Management determines in good
faith that such commission is reasonable in terms either of that particular
transaction or the overall responsibility of LGT Asset Management to the Funds
and the Portfolio and its other clients and that the total commissions paid by
the Funds and the Portfolio will be reasonable in relation to the benefits
received by the Funds and the Portfolio over the long term. Research services
may also be received from dealers who execute Fund transactions in over-
the-counter markets.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Funds or the Portfolio toward payment of the
Funds' or the Portfolio's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and the Portfolio and for other investment
accounts managed by LGT Asset Management are made independently of each other in
light of differing conditions. However, the same investment decision
occasionally may be made for two or more of such accounts, including one or both
Funds and the 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
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL INCOME FUNDS
the price or value of the security as far as the Funds and the Portfolio are
concerned, in other cases LGT Asset Management believes that coordination and
the ability to participate in volume transactions will be beneficial to the
Funds and the Portfolio.
Under a policy adopted by the Company's Board of Directors and the Portfolio's
Board of Trustees, and subject to the policy of obtaining the best net results,
LGT Asset Management may consider a broker/dealer's sale of the shares of the
Funds and the other funds for which LGT Asset Management serves as investment
manager in selecting brokers and dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other funds.
Each Fund and the Portfolio contemplates purchasing most foreign equity
securities in over-the-counter markets or stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held by a Fund and the Portfolio in the form of
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
Continental Depository Receipts ("CDRs") or European Depository Receipts
("EDRs") or securities convertible into foreign equity securities. ADRs, ADSs,
CDRs and EDRs may be listed on stock exchanges, or traded in the
over-the-counter markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which the Funds and the Portfolio may invest generally are
traded in the over-the-counter markets.
The Funds and the Portfolio contemplate that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted through
certain companies that are members of the Liechtenstein Global Trust. The
Company's Board of Directors has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations. For the fiscal years
ended October 31, 1995, 1994 and 1993, the Portfolio paid aggregate brokerage
commissions of $0, $24,000 and $2,000, respectively. For the fiscal years ended
October 31, 1995, 1994 and 1993, the Government Income Fund paid aggregate
brokerage commissions of $0, $92,397, and $353,696, respectively. For the fiscal
years ended October 31, 1995, 1994 and 1993, the Strategic Income Fund paid
aggregate brokerage commissions of $0, $134,876 and $6,511, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund and the Portfolio engages in portfolio trading when LGT Asset
Management concludes that the sale of a security owned by a Fund and the
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 Fund's and the Portfolio's
investment objectives, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Funds and the Portfolio generally do not intend to trade for
short-term profits, the securities in each Fund's and the Portfolio's portfolio
will be sold whenever LGT Asset Management believes it is appropriate to do so,
without regard to the length of time a particular security may have been held.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that a Fund or the Portfolio will bear directly, and
may result in the realization of net capital gains that are taxable when
distributed to each Fund's shareholders. The portfolio turnover rates for the
Government Income Fund, Strategic Income Fund and the Portfolio the last two
fiscal years were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C> <C>
Government Income Fund............................................ 385% 625%
Strategic Income Fund............................................. 238% 583%
High Income Portfolio............................................. 213% 178%
</TABLE>
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL INCOME FUNDS
DIRECTORS, TRUSTEES AND
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The term "Directors" as used below refers to the Company's Directors and the
Portfolio's Trustees collectively. The Company's Directors and executive
officers and the Portfolio's Trustees and executive officers are listed below.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust Limited (holding company of the various
Director, Chairman of the Board and international GT companies) since 1990; President of the Asset Management Division,
President Liechtenstein Global Trust Limited, since 1995; Director and President of LGT Asset
50 California Street Management Holdings, Inc. ("LGT Asset Management Holdings") since 1988; Director and
San Francisco, CA 94111 President of LGT Asset Management since 1989; Director of GT Global since 1987; President
of GT Global from 1987 to 1995; Director of GT Services since 1990; President of GT
Services from 1990 to 1995; Director of G.T. Global Insurance Agency, Inc. ("G.T.
Insurance") since 1992; and President of GT Insurance Agency from 1992 to 1995. Mr.
Minella also is a director or trustee of each of the other investment companies registered
under the 1940 Act that is managed or administered by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); Trustee, Seattle Art Museum. Mr. Bayley also is a
2 Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94118 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989, Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliations with the LGT companies.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL INCOME FUNDS
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management
Vice President and Secretary Holdings, LGT Asset Management, GT Global, GT Services and G.T.
50 California Street Insurance since February 1966. Senior Vice President, General Counsel
San Francisco, CA 94111 and Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Global, GT Services and G.T. Insurance from May, 1994 to February 1996.
Mr. Lee was the Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October, 1991 through May, 1994. For more than five years
prior to October, 1991, he was a shareholder in the law firm of Godfrey
& Kahn, S.C., Milwaukee, Wisconsin.
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995, Senior Vice
Vice President and Chief President - Finance and Administration of GT Global, GT Services and
Financial Officer G.T. Insurance. Senior Vice President - Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management and GT Global and GT Services.
He was Vice President - Finance of G.T. Insurance from 1992 to 1994; and
a Director of LGT Asset Management, GT Global and GT Services since
1991.
Kenneth W. Chancey, 50 Vice President of Mutual Fund Accounting at LGT Asset Management since
Vice President and Chief 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Accounting Officer from 1989-1992.
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management Holdings, LGT Asset Management,
San Francisco, CA 94111 GT Global and GT Services since 1991. From 1989 to 1991, Mr. Guarino was
an attorney at The Dreyfus Corporation. Prior thereto, he was associated
with Colonial Management Associates, Inc.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. From 1993 to
San Francisco, CA 94111 1994, Mr. Thelander was an associate at Kirkpatrick & Lockhart LLP (a
law firm). Prior thereto, he was an attorney with the U.S. Securities
and Exchange Commission.
</TABLE>
The Board has a Nominating and Audit Committee, composed of Miss Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Directors, reviewing audits of the Company and its funds and
recommending firms to serve as independent auditors of the Company. Each of the
Directors and officers of the Company is also a Director and officer of G.T.
Investment Portfolios, Inc., and 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 and Growth Portfolio, which also are registered investment
companies managed by LGT Asset Management. Each of the individuals listed above
serves as a Director or officer of the Company as well as a Trustee or officer
of the Portfolio. Each Director and Officer serves in total as a Director and or
Trustee and Officer, respectively, of 10 registered investment companies with 40
series managed or administered by LGT Asset Management. Each Director or Trustee
who is not a director, officer or employee of LGT Asset Management or any
affiliated company is paid aggregate fees of $5,000 per annum, plus $300 per
Fund for each meeting of the Board attended, and reimburses travel and other
expenses incurred in connection with attendance at such meetings. Other
Directors and officers receive no compensation or expense reimbursement from the
Company. For the fiscal year October 31, 1995, Mr. Anderson, Mr. Bayley, Mr.
Patterson and Mr. Quigley, received total compensation of $36,705.30,
$34,230.22, $36,755.58 and $33,706.85, respectively, from the Company's series
Funds for their services as Directors. For the fiscal year ended October 31,
1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $92,176.78, $87,868.64, $92,260.90 and $86,957.55, respectively,
from the 40 GT Global Mutual 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 February 22, 1996, 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 or of all the
Company's Funds in the aggregate.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL INCOME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
LGT Asset Management serves as the Government Income Fund's and the Strategic
Income Fund's investment manager and administrator under an Investment
Management and Administration Contract between the Company and LGT Asset
Management ("Company Management Contract") and as the Portfolio's investment
manager and administrator under an Investment Management and Administration
Contract between the Portfolio and LGT Asset Management ("Portfolio Management
Contract") (collectively, "Management Contracts"). LGT Asset Management serves
as the High Income Fund's administrator under an Administration Contract
("Administration Contract") between the Company and LGT Asset Management. The
Administration Contract will not be deemed an advisory contract, as defined
under the 1940 Act. As investment manager and administrator, LGT Asset
Management makes all investment decisions for the Government Income Fund, the
Strategic Income Fund and the Portfolio and as administrator, LGT Asset
Management administers each Fund's and the Portfolio's affairs. Among other
things, LGT Asset Management furnishes the services and pays the compensation
and travel expenses of persons who perform the executive, administrative,
clerical and bookkeeping functions of the Company, the Funds, and the Portfolio
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Government Income Fund and the Strategic
Income Fund each pay LGT Asset Management investment management and
administration fees, based on the Funds' average daily net assets computed daily
and paid monthly, at the annualized rate of .725% on the first $500 million,
.70% on the next 1 billion, .675% on the next $1 billion, and .65% on amounts
thereafter. The High Income Fund pays administration fees, computed daily and
paid monthly, to LGT Asset Management at the annualized rate of 0.25% of the
Fund's average daily net assets. In addition, the Fund bears a pro rata portion
of the investment management and administration fee paid by the Portfolio to LGT
Asset Management. The Portfolio pays such fees also computed daily and paid
monthly at the annualized rate of .475% on the first $500 million, .45% on the
next $1 billion, .425% on the next $1 billion, and .40% on amounts thereafter of
its average daily net assets, plus 2% of the Portfolio's total investment income
as stated in the Portfolio's Statement of Operations, calculated in accordance
with generally accepted accounting principles, adjusted daily for currency
revaluations, on a marked to market basis, of the Portfolio's assets; provided,
however, that during any fiscal year this amount shall not exceed 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles.
The Management Contracts may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable, or by the vote of a majority of the Fund's or the Portfolio's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors or Trustees who are not parties to the Management Contract or the
Administration Contract, as applicable 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 Contracts provide
that with respect to the Government Income Fund, the Strategic Income Fund and
the Portfolio and the Administration Contract provides that with respect to the
High Income Fund either the Company, the Portfolio or LGT Asset Management may
terminate the Contract without penalty upon sixty days' written notice to the
other party. The Management Contract and the Administration Contract terminate
automatically in the event of their assignment (as defined in the 1940 Act).
Under the Management Contracts, LGT Asset Management has agreed to waive its
investment management and administration fees from a Fund and to reimburse such
Fund to the extent necessary to assure that the Fund's annual expenses
(exclusive of brokerage commissions, organizational expenses, taxes, interest,
distribution-related expenses, certain expenses attributable to investing
outside the U.S. and extraordinary expenses) do not exceed the most stringent
expense limitations prescribed by any state in which the Fund's shares are
offered for sale. As applied to the High Income Fund and the Portfolio, LGT
Asset Management has agreed to reduce the investment management and
administration fee payable by the Portfolio by the amount by which the ordinary
operating expenses (exclusive of organization expenses, interest, taxes,
distribution-related expenses and extraordinary expenses) of the Portfolio for
any fiscal year borne by the High Income Fund, together with the direct ordinary
operating expenses (exclusive of brokerage commission, organization expenses,
taxes, interest, distribution-related expenses and extraordinary expenses) of
the High Income Fund, exceeds the most stringent expense limitations prescribed
by any state in which the shares of the High Income Fund are
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL INCOME FUNDS
offered for sale. Currently, the most restrictive applicable limitation provides
that a 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, LGT Asset Management
and GT Global voluntarily have undertaken to limit the expenses of the Advisor
Class shares of the Government Income Fund and the Strategic Income Fund
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual level of 1.50% of the average daily net assets of Fund's
Advisor Class during each fiscal year. The expenses of the Advisor Class shares
of the High Income Fund (and such Fund's pro rata portion of the Portfolio's
expenses) would be limited to the annual level of 1.85% of the average daily net
assets of that Fund's Advisor Class share. LGT Asset Management has agreed to
reimburse a Fund if the Fund's annual ordinary expenses exceed those respective
levels.
In each of the last three fiscal years the Government Income Fund paid
investment management and administration fees to LGT Asset Management in the
following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 4,946,971
1994....................................................................................................... 6,390,750
1993....................................................................................................... 5,222,537
</TABLE>
In each of the last three fiscal years the Strategic Income Fund paid investment
management and administration fees to LGT Asset Management in the following
amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995....................................................................................................... $ 4,293,053
1994....................................................................................................... 5,392,542
1993....................................................................................................... 1,568,540
</TABLE>
For the fiscal years ended October 31, 1995, 1994 and 1993, the Portfolio paid
investment management and administrative fees of $2,411,786, $2,266,420 and
$547,543, respectively, to LGT Asset Management. For these same periods, the
High Income Fund paid administration fees of $860,884, $886,795 and $212,294,
respectively, to LGT Asset Management.
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through each Fund's
principal underwriter and distributor, GT Global on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by each
Fund, to perform shareholder servicing, reporting and general transfer agent
functions for each Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent also is reimbursed
by each Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationery and office supplies.
LGT Asset Management serves as each Fund's pricing and accounting agent. As of
October 31, 1995, the Government Income Fund, Strategic Income Fund, and High
Income Fund paid LGT Asset Management fees of $40,218, $34,980 and $22,563,
respectively, for such accounting services.
EXPENSES OF THE FUNDS
The Fund pays all expenses not assumed by LGT Asset Management, GT Global and
other agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agent and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared by the 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 services performed and relative applicability to each Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of 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
each Fund and the Portfolio generally are higher than the comparable expenses of
such other funds.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing business
time) on each business day the NYSE is open for business. Currently, the NYSE is
closed on weekends and on certain days relating to the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
Each Fund's and the Portfolio's portfolio securities and other assets are valued
as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges are valued at the last sale price on the exchange 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 LGT Asset
Management to be the primary market.
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
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term debt investments
are amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by a Fund or the
Portfolio are valued at their last bid price in the case of listed options or,
in the case of OTC options at the average of the last bid prices obtained from
dealers, unless a quotation from only one dealer is available, in which case
only that dealer's price will be used. When market quotations for futures and
options on futures held by a Fund or the Portfolio are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also are generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's or the Portfolio's total assets.
The Fund's or the Portfolio's liabilities, including accruals for expenses, are
deducted from its total assets. Once the total value of a Fund's or the
Portfolio'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 nearest cent, is the net asset value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern or Latin American securities trading may not take place on
all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. Consequently, the calculation of the Funds' respective net
asset values therefore may not take place
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
contemporaneously with the determination of the prices of securities held by the
Funds. Events affecting the values of portfolio securities that occur between
the time their prices are determined and the close of regular trading on the
NYSE will not be reflected in the Funds' net asset values unless LGT Asset
Management, under the supervision of the Company's Board of Directors,
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 cannot purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND
REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectuses.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such 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 each Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
of a Fund may be exchanged only for Advisor Class shares of other GT 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 GT Global
Mutual Funds. The privilege may be discontinued or changed at any time by any of
the funds upon 60 days' prior notice to the shareholders of such Fund and is
available only in states where the exchange may be 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, telex or telegram
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
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution, if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, currently are
borne by the appropriate 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 30 days written notice.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
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 from disposing of
their portfolio securities or in fairly determining the value of their assets,
or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future 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 value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the 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 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 outstanding voting securities of the issuer; 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. The
High Income Fund, as an investor in the Portfolio, will be 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 that 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 the High Income
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICS") and other foreign securities by, the Portfolio.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
TAXATION OF THE PORTFOLIO -- GENERAL
The Portfolio will be treated as a partnership for federal income tax purposes
and will not be a "publicly traded partnership." As a result, the Portfolio will
not be subject to federal income tax; instead, the High Income Fund, as an
investor in the Portfolio, will be 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. The Portfolio also will not be subject to
New York income or franchise tax.
Because, as noted above, the High Income Fund will be 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 that Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to conduct
its operations so that the High Income Fund will be able to satisfy all those
requirements.
Distributions to the High Income Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in that 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 that
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of that
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The High Income Fund's basis for its interest in the
Portfolio generally will equal the amount of cash and the basis of any property
that Fund invests in the Portfolio, increased by that 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 that Fund and (b) that Fund's
share of the Portfolio's losses.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
For purposes of the following discussion, "Investor Fund" means the Government
Income Fund, the Strategic Income Fund or the Portfolio.
FOREIGN TAXES. Dividends and interest received by an Investor Fund may be
subject to income, withholding, or other taxes imposed by foreign countries and
U.S. possessions that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
foreign taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors. If more than 50%
of the value of a Fund's total assets (taking into account, in the case of the
High Income Fund, its proportionate share of the 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 the High Income Fund, its proportionate
share of the Portfolio's taxes paid). 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 (or, in the case of the High Income
Fund, the Portfolio's income) from sources within, and taxes paid to, foreign
countries if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Investor Fund may invest in the
stock of PFICs part (or, in the case of the High Income Fund, its proportionate
share of a part). 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 the High Income Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of the High Income Fund, by the Portfolio) on the stock of a PFIC or
of any gain from its (or, in the case of the High Income Fund, by the
Portfolio's) disposition of the 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 the Fund to the extent that income is distributed to its
shareholders.
If an Investor Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Investor Fund (or, in the case of the Portfolio, the
High Income Fund) will be required to include in income each taxable year its
pro rata share of the QEF's ordinary earnings and net capital gain (the excess
of net long-term capital gain over net short-term capital loss) -- which most
likely would have to be distributed to satisfy the Distribution Requirement and
to avoid imposition of the Excise Tax -- even if those earnings and gain were
not
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL INCOME FUNDS
received by the Fund. In most instances it will be very difficult, if not
impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs such as the Fund would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Investor Fund's use
of hedging transactions, such as selling (writing) and purchasing options and
Futures Contracts and entering into Forward Contracts, involves complex rules
that will determine, for federal income tax purposes, the character and timing
of recognition of the gains and losses an Investor Fund realizes in connection
therewith. Income from foreign currencies (except certain gains therefrom that
may be excluded by future regulations), and income from transactions in options,
Futures and Forward Contracts derived by an Investor Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Investor Fund (or, in
the case of the Portfolio, the High Income Fund). However, income from the
disposition by an Investor Fund of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that
Investor Fund (or, in the case of the Portfolio, the High Income Fund) if they
are held for less than three months. Income from the disposition by an Investor
Fund 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 Investor Fund (or, in the case
of the Portfolio, the High Income Fund) if they are held for less than three
months.
If an Investor Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Investor Fund (or,
in the case of the Portfolio, the High Income 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 Investor Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions listed. To the extent this treatment is
not available, an Investor Fund may be forced to defer the closing out of
certain options, Futures, Forward Contract or foreign currency positions beyond
the time when it otherwise would be advantageous to do so, in order for that
Investor Fund (or, in the case of the Portfolio, the High Income Fund) to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by an Investor Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts and options on foreign currencies ("Section 988 gains or losses").
Under Section 988, each foreign currency 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 Investor Fund attempts to monitor
Section 988 transactions to minimize any adverse tax impact.
TAXATION OF THE FUND'S 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 the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL INCOME FUNDS
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.
Distributions of net investment income by a Fund to a shareholder who, as to the
United States, is a nonresident alien individual, nonresident alien fiduciary of
a trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder") 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 taxpayers 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 Fund's, their shareholders and the Portfolio.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from the Fund.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) Ltd. in
Tokyo; LGT Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE
Ltd. located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of each Fund's and the
Portfolio's assets. State Street is authorized to establish and has established
separate accounts in foreign currencies and to cause securities of the Funds and
the Portfolio to be held in separate accounts outside the United States in the
custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' and the Portfolio's independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston Massachusetts 02109. Coopers & Lybrand
L.L.P., conducts audits of each Fund's and the Portfolio's financial statements,
assists in the preparation of the Funds' and the Portfolio's federal and state
income tax returns and consults with the Company, the Funds and the Portfolio as
to matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Funds and the Portfolio included in this
Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P., as stated in their opinion appearing herein and are included in reliance
upon such opinion given upon the authority of said firm as experts in accounting
and auditing.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
USE OF NAME
LGT Asset Management has granted the Funds and the Portfolio the right to use
the "GT" name and "GT Global" and has reserved the right to withdraw its consent
to the use of such names by the Company, the Funds and/or the Portfolio at any
time, or to grant the use of such names to any other company.
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INVESTMENT RESULTS
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A Fund's "Standardized Return", as referred to in the Prospectuses (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Advisor Class 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) to the (n)th
power = EV. The following assumptions will be reflected in computations made in
accordance with this formula: (1) reinvestment of dividends and other
distributions at net asset value on the reinvestment date determined by the
Board; and (2) a complete redemption at the end of any period illustrated.
The Funds' Standardized Returns for their Advisor Class shares, stated as
aggregate total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) to October 31, 1995............... 0.83% 3.72% 6.54%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Funds 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 Funds'
Non-Standardized Returns for their Advisor Class shares, stated as aggregate
total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) to October 31, 1995............... 0.83% 3.72% 6.54%
</TABLE>
Current yield ("YIELD"), which is calculated separately for Advisor Class shares
of each fund, is computed by dividing the difference between dividends and
interest earned during a one-month period ("a") and expenses accrued for the
period (net of reimbursements) ("b") by the product of the average daily number
of shares outstanding during the period that were entitled to receive dividends
("c") and the maximum offering price per share on the last day of the period
("d") according to the following formula as required by the Securities and
Exchange Commission:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
a-b
YIELD = 2 ( -- + 1 ) to the sixth power-1
cd
</TABLE>
The current yields of the Advisor Class shares of the Government Income Fund,
Strategic Income Fund and the High Income Fund for the one month period ended
October 31, 1995, were 7.46%, 12.58% and 13.99%, respectively.
As of October 22, 1992, the investment objectives and policies of the Strategic
Income Fund were changed to high current income, primarily, and capital
appreciation, secondarily. Prior to October 22, 1992, the Strategic Income Fund
operated as the GT Global Bond Fund and had investment objectives which sought
primarily, capital appreciation and moderate current income, secondarily. The
total returns and yield for the Strategic Income Fund were primarily achieved
under the Strategic Income Fund's prior investment objectives.
A Fund's "Standardized Return", as referred to in the Prospectuses (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")
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
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 with
respect to Class A shares computations made in accordance with this formula: (1)
for Class A shares, deduction of the maximum sales charge with respect to Class
B shares 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 Funds' Standardized Returns, for their Class A shares, stated as average
annual total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 4.03% (1.84)% (2.07)%
October 31, 1990 through October 31, 1995................................... 6.09% 7.59% N/A
March 29, 1988 through October 31, 1995..................................... 6.68% 7.23% N/A
October 22, 1992 through October 31, 1995................................... N/A N/A 9.50 %
</TABLE>
The Funds' Standardized Returns for their Class B shares, which were first
offered on October 22, 1992, stated as average annual total returns, at October
31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 3.22% (2.26)% (2.59)%
October 22, 1992 through October 31, 1995................................... 5.21% 6.55% 9.99%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Funds 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 Funds'
Non-Standardized Returns for their Class A shares, stated as aggregate total
returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 9.22% 3.06% 2.81%
October 31, 1990 through October 31, 1995................................... 7.13% 8.64% N/A
March 29, 1988 through October 31, 1995..................................... 71.52% 78.41% N/A
October 22, 1992 through October 31, 1995................................... N/A N/A 38.15 %
</TABLE>
The Funds' Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as aggregate total returns, at October 31,
1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 8.22% 2.48% 2.07%
October 22, 1992 through October 31, 1995................................... 18.40% 22.97% 35.37%
</TABLE>
The Funds' Non-Standardized Returns for the Funds' Class A shares stated as
average annual total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 9.22% 3.06% 2.81%
October 31, 1990 through October 31, 1995................................... 7.13% 8.64% N/A
March 29, 1988 through October 31, 1995..................................... 7.36% 7.92% N/A
October 22, 1992 through October 31, 1995................................... N/A N/A 11.28 %
</TABLE>
The Funds' Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as average annual total returns, at October
31, 1995, were as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
PERIOD INCOME FUND INCOME FUND FUND
- ---------------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1995................................................. 8.22% 2.48% 2.07%
October 22, 1992 through October 31, 1995................................... 5.74% 7.08% 10.53%
</TABLE>
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
Current yield ("YIELD"), which is calculated separately for Class A and Class B
shares of each fund, is computed by dividing the difference between dividends
and interest earned during a one-month period ("a") and expenses accrued for the
period (net of reimbursements) ("b") by the product of the average daily number
of shares outstanding during the period that were entitled to receive dividends
("c") and the maximum offering price per share on the last day of the period
("d") according to the following formula as required by the Securities and
Exchange Commission:
<TABLE>
<S> <C> <C> <C> <C> <C>
a-b
YIELD = 2 ( -- + 1 ) (6) -1
cd
</TABLE>
The current yields of the Class A shares of the Government Income Fund,
Strategic Income Fund and the High Income Fund for the one month period ended
October 31, 1995, were 7.27%, 11.63% and 12.98%, respectively. The current
yields of the Class B shares of Government Income Fund, Strategic Income Fund
and High Income Fund for the one month period ended October 31, 1995 were 6.44%,
11.55%, and 12.95%, respectively.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, as amended, on account
of the inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
LGT Asset Management, 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 certain
indices relate only to government bonds. Each of these factors will cause the
performance of each Fund to differ from relevant indices.
Each Fund and GT Global, from time to time, may compare the Funds with the
following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets including the Salomon Brothers
World Government Bond Index, which is a widely used index of ten year
government bonds with remaining maturities greater than one year.
(2) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service (excluding
Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar") and/or other companies that rank 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 without such peer group. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of risk-adjusted
performance. Morningstar ratings are calculated from a fund's three, five
and ten year average annual returns with appropriate fee adjustments and a
risk factor that reflects fund performance relative to the three-month U.S.
Treasury bill monthly returns. Ten percent of
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
the funds in an investment category receive five stars and 22.5% receive
four stars. The ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 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.
(9) 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 and the Salomon Brothers Brady Bond Index which
measures the total return performance of Brady Bonds issued since March,
1990, and are issued in U.S. dollar denominated instruments.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(13) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on bond and stock markets in developing
countries
(14) J.P. Morgan & Co. Bond Indices, including, among others, the J.P.
Morgan Traded Government Bond Index which is an index composed of liquid
non-U.S. fixed income securities based on market weightings and currency
since 1986.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope, each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and reports produced by the World Bank and its
affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's Investors Service, Fitch Investors Service, Standard &
Poor's.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
Indices, economic and financial data prepared by the research departments of
such financial organizations as Salomon Brothers, Inc., Lehman Brothers, Merrill
Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith Barney,
S.G. Warburg, Jardine Flemming, The Bank for International Settlements, Asian
Development Bank, Bloomberg, L.P. and Ibbottson Associates may be used as well
as information reported by the Federal Reserve and the respective Central Banks
of various nations. In addition, performance rankings, ratings and commentary
reported periodically in national financial publications, included but not
limited to Money Magazine, Smart Money, Global Finance, EuroMoney, Financial
World, Forbes, Fortune, Business Week, Latin Finance, the Wall Street Journal,
Emerging Markets Weekly, Kiplinger's
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
Guide To Personal Finance, Barron's, The Financial Times, USA Today, The New
York Times and Investors Business Digest. Each Fund may compare its performance
to that of other compilations or indices of comparable quality to those listed
above and other indices which may be developed and made available.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management in
advertising materials.
GT Global believes the GT Global Income Funds can be an appropriate investment
for long-term investment goals including but not limited to funding retirement,
paying for education or purchasing a house. The GT Global Income Funds do not
represent a complete investment program and the investors should consider the
Funds as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
The Funds may compare their performance to that of other compilations or indices
of comparable quality to those listed above which may be developed and made
available in the future. The Funds may be compared in advertising to
Certificates of Deposit (CDs), the Bank Rate Monitor National Index, an average
of the quoted rates for 100 leading banks and thrifts in ten U.S. cities chosen
to represent the ten largest Consumer Metropolitan statistical areas, or other
investments issued by banks. The Funds differ from bank investments in several
respects. The Funds may offer greater liquidity or higher potential returns than
CDs; but unlike CDs, the Funds will have a fluctuating share price and return
and is not FDIC insured.
The Funds' performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar, Inc. in its advertising materials.
Morningstar,
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
Inc. is a mutual fund rating service that rates mutual funds on the basis of
risk-adjusted performance. In addition, the Fund may quote financial or business
publications and periodicals as they relate to fund management, investment
philosophy, and investment techniques. Rankings that compare the performance of
GT Global Funds to one another in appropriate categories over specific periods
of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R2 in advertising. In addition, the Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare the Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable an
investor to make pre-tax contributions. Because of their advantages, these
retirement plans may produce returns superior to comparable non-retirement
investments. The Funds may also discuss these plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 each
year to an IRA (or if less, 100% of compensation). If your spouse is not
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified employee pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit-sharing plan, additionally permits the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. 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>
GT GLOBAL INCOME FUNDS
The major types of investment risk are market risk, industry risk, credit risk,
interest rate risk and inflation risk. Market risk entails a change in value of
a security due to market uncertainty. Industry risk can be described as the
market risk associated with companies engaged in a similar business.
The next two risks, credit and interest rate risk, more often are associated
with fixed income investing. Credit risk refers to the creditworthiness of an
issuer of debt securities and its ability to pay interest and repay the
principal value of the bond. Interest rate risk has two components. When
interest rates rise or fall the value of the security generally will move
correspondingly in the opposite direction. Further, the longer the maturity the
greater the impact on the bond's value.
Finally, 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.
From time to time, the Fund and GT Global will quote information including but
not limited to data regarding: individual countries, regions, world stock
exchanges, and economic and demographic statistics such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, GT Guide
to World Equity Markets, Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry, or market: International Finance
Corporation, GT Guide to World Equity Markets, Salomon Brothers Inc. and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
G.T. Capital Management, Inc.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management 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 GT 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 LGT Asset Management by the
government of Hong Kong,
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
Japan's Ministry of Finance or any other government or government agency. Nor do
any such accomplishments of LGT Asset Management provide any assurance that the
GT Global Mutual Funds' investment objectives will be achieved.
THE LGT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the GT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee which sets broad guidelines for asset
allocation and currency management based on LGT Asset Management's own
macroeconomic forecasts and research from its worldwide offices. The bottom-up
approach utilizes regional teams of individual portfolio managers to implement
the committee's quidelines by selecting local securities that offer strong
growth and income potential.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
LGT Asset Management has identified six phases to track the progress of
developing economies.
In addition, LGT Asset Management focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991, to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the 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. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear somewhat
greater.
A -- Upper-medium-grade-obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment 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
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
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 as
well assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- 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 that are not
rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic ratings
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
STANDARD & POOR'S RATINGS GROUP ("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 -- High grade. Very strong capacity to pay interest and repay
principal and differ from AAA issues only in a small degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
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
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
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 which 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.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest 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. The "D" rating also will be used upon 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 rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designations "Prime-1" and "Prime-2" to indicate
commercial paper having the highest capacity for timely repayment. Issuers (or
supporting institutions) rated Prime-1 have a superior ability to repay senior
short-term debt obligations. Prime-1 repayment ability generally will be
evidenced by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issues rated
Prime-2 have a strong ability to repay senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. A-1 --
This highest rating indicates that the degree of safety regarding timely payment
is strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus sign (+) designation. A-2 --
Capacity for timely payments on issues with this designation is strong; 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 44
<PAGE>
GT GLOBAL INCOME FUNDS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of GT Global Government Income Fund, GT Global
Strategic Income Fund, GT Global High Income Fund, and Global High Income
Portfolio as of October 31, 1995 and for the year then ended appear on the
following pages.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Government Income Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Government Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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, 1995 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 Government Income Fund as of October 31, 1995, 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 15, 1995
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (92.2%)
Australia (5.4%)
Australian Government, 7% due 4/15/00 ............... AUD 26,050,000 $ 18,926,518 3.1
New South Wales Treasury, 11.5% due 7/1/99 .......... AUD 16,662,000 13,982,148 2.3
Austria (4.9%)
Republic of Austria, 3.75% due 2/3/09 ............... JPY 2,946,000,000 30,091,224 4.9
Canada (5.1%)
Canadian Government, 8.50% due 3/1/00 ............... CAD 40,580,000 31,859,830 5.1
Denmark (3.9%)
Kingdom of Denmark, 7% due 12/15/04 ................. DKK 140,500,000 24,394,862 3.9
Finland (2.3%)
Finnish Housing Fund, 10.75% due 3/15/02 ............ FIM 53,000,000 14,529,659 2.3
France (7.7%)
French Treasury Bond (BTAN), 7% due 10/12/00 ........ FRF 231,000,000 48,033,446 7.7
Germany (6.8%)
Deutschland Republic, 6.25% due 1/4/24 .............. DEM 67,500,000 42,407,536 6.8
Italy (8.8%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 4/1/05 ................................. ITL 60,500,000,000 35,704,420 5.8
9.50% due 12/1/99 ................................. ITL 31,340,000,000 18,609,601 3.0
New Zealand (2.0%)
New Zealand Government, 10% due 3/15/02 ............. NZD 16,700,000 12,570,834 2.0
South Africa (3.0%)
Republic of South Africa, 11.5% due 5/30/00 ......... ZAR 75,700,000 18,748,024 3.0
Spain (4.0%)
Kingdom of Spain, 10% due 2/28/05 ................... ESP 3,195,000,000 24,918,432 4.0
Sweden (7.6%)
Swedish Government, 13% due 6/15/01 ................. SEK 266,700,000 47,141,592 7.6
United Kingdom (6.3%)
United Kingdom Treasury:
8.5% due 12/7/05 ................................. GBP 12,000,000 19,701,280 3.2
8% due 12/7/15 ................................... GBP 12,500,000 19,521,989 3.1
United States (24.4%)
United States Treasury Note, 7.875% due 11/15/04 .... USD 68,500,000 76,891,250 12.4
United States Treasury Bond, 6.875% due 8/15/25 ..... USD 69,800,000 74,795,097 12.0
------------
Total Government & Government Agency Obligations (cost
$557,951,013) ......................................... 572,827,742
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Supranational Bond (3.9%)
International Bank of Reconstruction & Development,
4.75% due 12/20/04 (cost $25,982,989) ................ JPY 2,156,300,000 $ 24,208,534 3.9
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $583,934,002) ..... 597,036,276 96.1
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (2.1%)
Mexico (2.1%)
Mexican Tesobonos, effective yield 15.73%, due
11/9/95 ............................................ USD 7,000,000 6,975,610 1.1
Mexican Cetes, effective yield 47.60%, due
1/18/96 ............................................ MXN 46,650,000 5,939,357 1.0
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $13,392,083) ......... 12,914,967 2.1
------------ -----
TOTAL INVESTMENTS (cost $597,326,085) ................... 609,951,243 98.2
Other Assets and Liabilities ............................ 11,064,585 1.8
------------ -----
NET ASSETS .............................................. $621,015,828 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $621,015,828.
* For Federal income tax purposes, cost is $598,758,374 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 20,143,317
Unrealized depreciation: (8,950,448)
-------------
Net unrealized appreciation: $ 11,192,869
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ----------------------------------------------------------------------------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks............................................................... 19,179,095 1.42383 11/30/95 $ 249,600
Deutsche Marks............................................................... 12,299,865 1.38974 11/30/95 (137,713)
Deutsche Marks............................................................... 12,196,684 1.41600 11/30/95 92,164
Deutsche Marks............................................................... 12,345,450 1.38179 01/24/96 (174,542)
Deutsche Marks............................................................... 17,621,881 1.39266 01/24/96 (109,654)
Danish Kroner................................................................ 1,830,563 5.77080 11/14/95 97,701
Danish Kroner................................................................ 787,142 5.43400 11/14/95 (4,172)
Spanish Pesetas.............................................................. 1,016,324 122.62500 11/07/95 5,926
Finnish Marks................................................................ 1,179,528 4.23407 12/28/95 (1,369)
French Francs................................................................ 13,368,831 5.14091 11/30/95 648,846
French Francs................................................................ 1,740,086 4.93220 12/04/95 14,285
French Francs................................................................ 4,077,070 4.95845 12/04/95 54,876
Japanese Yen................................................................. 6,134,934 99.25500 11/24/95 (169,030)
Japanese Yen................................................................. 323,729 99.53299 11/24/95 (7,990)
Swedish Krona................................................................ 5,377,185 6.64000 01/05/96 (21,911)
------------- -------------
Total Contracts to Buy (Payable amount $108,941,350)....................... 109,478,367 537,017
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 17.63%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Australian Dollars........................................................... 8,734,032 1.32675 01/18/96 (119,012)
Canadian Dollars............................................................. 13,137,809 1.33941 11/20/95 2,305
Deutsche Marks............................................................... 576,389 1.41720 11/30/95 (4,840)
Danish Kroner................................................................ 14,644,502 5.51880 11/14/95 (148,597)
Danish Kroner................................................................ 1,450,721 5.75380 11/14/95 (73,370)
Spanish Pesetas.............................................................. 6,619,637 120.34000 11/07/95 86,362
Spanish Pesetas.............................................................. 6,931,343 127.61000 11/07/95 (309,605)
Finnish Marks................................................................ 16,513,387 4.35890 12/28/95 (454,290)
French Francs................................................................ 17,786,319 5.06050 11/30/95 (594,342)
French Francs................................................................ 6,711,780 5.12790 11/30/95 (309,549)
French Francs................................................................ 11,283,321 4.95714 11/30/95 (149,636)
French Francs................................................................ 12,097,168 4.90654 12/04/95 (36,340)
French Francs................................................................ 9,218,481 5.07865 12/13/95 (338,169)
French Francs................................................................ 1,205,965 4.93700 12/13/95 (10,908)
French Francs................................................................ 8,385,441 4.95600 12/18/95 (107,170)
French Francs................................................................ 619,295 4.88750 12/18/95 654
Pounds Sterling.............................................................. 1,416,935 0.63710 01/16/96 (4,295)
Pounds Sterling.............................................................. 818,673 0.63623 01/16/96 (1,363)
Pounds Sterling.............................................................. 676,980 0.63355 01/16/96 1,732
Italian Lira................................................................. 5,286,464 1,634.54999 01/11/96 (86,256)
Italian Lira................................................................. 1,915,566 1,609.59999 01/11/96 (2,047)
Italian Lira................................................................. 12,504,077 1,637.27600 01/26/96 (199,585)
Italian Lira................................................................. 12,482,507 1,640.29200 01/26/96 (221,826)
Swedish Krona................................................................ 27,973,362 7.03330 01/05/96 (1,456,649)
Swedish Krona................................................................ 7,612,992 6.80770 01/05/96 (157,280)
------------- -------------
Total Contracts to Sell (Receivable amount $201,909,070)................... 206,603,146 (4,694,076)
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 33.27%
Total Open Forward Foreign Currency Contracts, Net......................... $(4,157,059)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$597,326,085) (Note 1)........................... $ 609,951,243
Interest and interest withholding tax reclaims
receivable....................................... 17,932,615
Receivable for Fund shares sold................... 2,584,411
Receivable for securities sold.................... 700
Cash held as collateral for securities loaned
(Note 1)......................................... 144,235,681
-------------
Total assets.................................... 774,704,650
-------------
Liabilities:
Payable for open forward foreign currency
contracts, net (Note 1).......................... 4,157,059
Payable for Fund shares repurchased............... 3,428,606
Payable for forward foreign currency contracts --
closed (Note 1).................................. 520,441
Payable for investment management and
administration fees (Note 2)..................... 386,836
Payable for service and distribution expenses
(Note 2)......................................... 318,422
Due to custodian.................................. 303,622
Payable for printing and postage expenses......... 137,943
Payable for transfer agent fees (Note 2).......... 93,567
Payable for professional fees..................... 32,987
Payable for custodian fees (Note 1)............... 23,750
Payable for registration and filing fees.......... 22,289
Payable for fund accounting fees (Note 2)......... 13,536
Distribution payable (Note 1)..................... 8,264
Payable for Directors' fees and expenses (Note
2)............................................... 1,662
Other accrued expenses............................ 4,157
Collateral for securities loaned (Note 1)......... 144,235,681
-------------
Total liabilities............................... 153,688,822
-------------
Net assets.......................................... $ 621,015,828
-------------
-------------
Class A:
Net asset value and redemption price per share
($385,403,553 DIVIDED BY 43,758,850 shares
outstanding)....................................... $ 8.81
-------------
-------------
Maximum offering price per share (100/95.25 of
$8.81) *........................................... $ 9.25
-------------
-------------
Class B:+
Net asset value and offering price per share
($235,480,993 DIVIDED BY 26,744,046 shares
outstanding)....................................... $ 8.80
-------------
-------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and
redemption price per share ($131,282 DIVIDED BY
14,914 shares outstanding)......................... $ 8.80
-------------
-------------
Net assets consist of:
Paid in capital (Note 4).......................... $ 758,763,464
Undistributed net investment income............... 1,761,999
Accumulated net realized loss on investments and
foreign currency transactions.................... (148,171,697)
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies..... (3,963,096)
Net unrealized appreciation of investments........ 12,625,158
-------------
Total -- representing net assets applicable to
capital shares outstanding......................... $ 621,015,828
-------------
-------------
<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 50
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of $524).... $57,430,425
-----------
Total investment income................................... 57,430,425
-----------
Expenses:
Investment management and administration fees (Note 2)...... 4,946,971
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,536,304
Class B.................................. 2,500,417 4,036,721
------------
Transfer agent fees (Note 2)................................ 1,094,433
Printing and postage expenses............................... 333,530
Custodian fees (Note 1)..................................... 430,398
Fund accounting fees (Note 2)............................... 175,158
Audit fees.................................................. 60,225
Legal fees.................................................. 28,150
Directors' fees and expenses (Note 2)....................... 18,450
Registration and filing fees................................ 14,457
Insurance expenses.......................................... 8,030
Other expenses.............................................. 9,855
-----------
Total expenses before reductions.......................... 11,156,378
-----------
Expense reductions (Note 1)............................. (218,967)
-----------
Total net expenses........................................ 10,937,411
-----------
Net investment income......................................... 46,493,014
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 21,102,232
Net realized loss on foreign currency
transactions.............................. (25,567,655)
------------
Net realized loss during the year......................... (4,465,423)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ 3,260,081
Net change in unrealized appreciation of
investments............................... 12,089,374
------------
Net unrealized appreciation during the year............... 15,349,455
-----------
Net realized and unrealized gain on investments and foreign
currencies................................................... 10,884,032
-----------
Net increase in net assets resulting from operations.......... $57,377,046
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income...................... $ 46,493,014 $ 59,484,891
Net realized loss on investments and
foreign currency transactions............. (4,465,423) (146,390,203)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... 3,260,081 (5,037,165)
Net change in unrealized appreciation
(depreciation) of investments............. 12,089,374 (996,786)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 57,377,046 (92,939,263)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (29,604,447) (44,148,920)
From net realized gain on investments...... -- (17,627,677)
In excess of net realized gain on
investments............................... -- (35,374,886)
Return of capital.......................... -- (6,291,488)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (15,123,091) (16,256,126)
From net realized gain on investments...... -- (5,517,894)
In excess of net realized gain on
investments............................... -- (11,171,017)
Return of capital.......................... -- (2,097,163)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (3,476) --
----------------- -----------------
Total distributions...................... (44,731,014) (138,485,171)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 359,717,885 544,282,723
Decrease from capital shares repurchased... (515,847,692) (439,631,119)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (156,129,807) 104,651,604
----------------- -----------------
Total decrease in net assets................. (143,483,775) (126,772,830)
Net assets:
Beginning of year.......................... 764,499,603 891,272,433
----------------- -----------------
End of year................................ $ 621,015,828 $ 764,499,603
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1995(D) 1994(D) 1993(D) 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income................. 0.62 0.65 0.74 0.92 0.99
Net realized and unrealized gain
(loss) on investments................ 0.15 (1.52) 1.34 (0.31) (0.07)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) from
investment operations.............. 0.77 (0.87) 2.08 0.61 0.92
----------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income............ (0.59) (0.65) (0.74) (0.83) (1.00)
From net realized gain on
investments.......................... -- (0.27) -- (0.13) (0.09)
In excess of net realized gain on
investments.......................... -- (0.55) -- -- --
Return of capital..................... -- (0.10) -- -- --
From sources other than net investment
income............................... -- -- (0.10) (0.11) --
----------- ----------- ----------- ----------- -----------
Total distributions................. (0.59) (1.57) (0.84) (1.07) (1.09)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total investment return (c)............. 9.22% (8.87)% 21.9% 6.3% 9.4%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 385,404 $ 502,094 $ 708,301 $ 623,387 $ 399,200
Ratio of net investment income to
average net assets..................... 6.98% 6.87% 7.1% 9.0% 9.5%
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.35% 1.33% 1.4% 1.6% 1.6%
Without expense reductions............ 1.38% --%* --%* --%* --%*
Portfolio turnover rate++++............. 385% 625% 495% 351% 326%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
-------------------------------------------------------- CLASS+++
-------------
YEAR ENDED OCTOBER 22, 1992 JUNE 1, 1995
OCTOBER 31, TO TO
------------------------------------- OCTOBER 31, OCTOBER 31,
1995(D) 1994(D) 1993(D) 1992 1995(D)
----------- ----------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.64 $ 11.07 $ 9.83 $ 9.87 $ 8.98
----------- ----------- ----------- ------- -------------
Income from investment operations:
Net investment income................. 0.55 0.59 0.67 0.02 0.26
Net realized and unrealized gain
(loss) on investments................ 0.14 (1.52) 1.34 (0.06) (0.19)
----------- ----------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 0.69 (0.93) 2.01 (0.04) 0.07
----------- ----------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ (0.53) (0.59) (0.67) -- (0.25)
From net realized gain on
investments.......................... -- (0.27) -- -- 0.00
In excess of net realized gain on
investments.......................... -- (0.54) -- -- 0.00
Return of capital..................... -- (0.10) -- -- 0.00
From sources other than net investment
income............................... -- -- (0.10) -- 0.00
----------- ----------- ----------- ------- -------------
Total distributions................. (0.53) (1.50) (0.77) -- (0.25)
----------- ----------- ----------- ------- -------------
Net asset value, end of period.......... $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 8.80
----------- ----------- ----------- ------- -------------
----------- ----------- ----------- ------- -------------
Total investment return (c)............. 8.22% (9.39)% 21.1% (0.4)%(a) 0.83%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 235,481 $ 262,405 $ 182,972 $ 2,624 $ 131
Ratio of net investment income to
average net assets..................... 6.33% 6.22% 6.5% 8.0%(b) 7.33%(b)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 2.00% 1.98% 2.0% 1.9%(b) 1.00%(b)
Without expense reductions............ 2.03% --%* --%* --%* 1.03%(b)
Portfolio turnover rate++++............. 385% 625% 495% 351% 385%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Government Income 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 twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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 earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." The Fund
could be exposed to risk if a counterparty is unable to meet the terms of the
contracts or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
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 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 portfolio 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 Fund may use options to manage its exposure
to the bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a
call or put option is included in the Fund's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund has purchased
expires on the stipulated expiration date, the Fund realizes a loss in the
amount of the cost of the option. If the Fund enters into a closing sale
transaction, the Fund realizes a gain or loss, depending on whether proceeds
from the closing sale transaction are greater or less than the cost of the
option. If the Fund exercises a call option, the cost of the securities acquired
by exercising the call is increased by the premium paid to buy the call. If the
Fund exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the bond market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, securities with an aggregate value of approximately
$135,853,476 were on loan to brokers. The loans were secured by cash collateral
of $144,235,681.
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 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 year ended October
31, 1995, the Fund received $218,967 of income from securities lending which was
used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$161,242,885, of which $145,497,299 expires in 2002, and $15,745,586 expires in
2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) 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.
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 0.725% on the first $500 million of average daily net assets of the
Fund; 0.70% on the
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
next $1 billion; 0.675% on the next $1 billion and 0.65% on amounts thereafter.
These fees are computed daily and paid monthly, and are subject to reduction in
any year to the extent that the Fund's 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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$58,490 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $56,072 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $1,540,013. 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 1.85%, 2.50%, and 1.50% of the average daily net assets
of the Fund's Class A, Class B, and Advisor Class shares, respectively. If
necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995. the Fund paid fund accounting fees of $40,218 to G.T. Capital.
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
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
$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, 1995, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $1,909,751,501 and $2,215,955,836, respectively.
Purchases and sales of U.S. government obligations by the Fund aggregated
$525,622,907 and $384,411,620, respectively.
4. CAPITAL SHARES
At October 31, 1995, 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; 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 Health Care Fund; 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
Currency 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 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;
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 High Income Fund; and
200,000,000 were classified as shares of G.T. Global Consumer Products and
Services Fund. 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.
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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 17,764,859 $ 154,603,577 19,001,277 $ 188,254,231
Shares issued in connection with reinvestment of distributions............ 2,042,839 17,630,697 5,879,273 57,782,308
----------- ------------- ----------- -------------
19,807,698 172,234,274 24,880,550 246,036,539
Shares repurchased........................................................ (34,203,619) (297,666,599) (30,701,436) (286,176,445)
----------- ------------- ----------- -------------
Net decrease.............................................................. (14,395,921) $(125,432,325) (5,820,886) $ (40,139,906)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 20,700,346 $ 178,801,868 28,653,167 $ 277,906,482
Shares issued in connection with reinvestment of distributions............ 1,005,589 8,536,817 2,091,794 20,339,702
----------- ------------- ----------- -------------
21,705,935 187,338,685 30,744,961 298,246,184
Shares repurchased........................................................ (25,343,381) (218,171,165) (16,898,465) (153,454,674)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (3,637,446) $ (30,832,480) 13,846,496 $ 144,791,510
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 15,659 $ 141,450
Shares issued in connection with reinvestment of distributions............ 397 3,476
----------- -------------
16,056 144,926
Shares repurchased........................................................ (1,142) (9,928)
----------- -------------
Net increase.............................................................. 14,914 $ 134,998
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
5. COVERED CALL OPTIONS WRITTEN:
The Fund's written options contracts activity for the year ended October 31,
1995 was as follows:
<TABLE>
<CAPTION>
UNDERLYING NOMINAL
AMOUNT IN USD PREMIUMS
-------------------- ------------
<S> <C> <C>
Options outstanding at October 31, 1994............................................... 0 $ 0
Options written....................................................................... 69,420,000 319,332
Options cancelled in closing purchase transactions ($819,156 loss realized)........... (69,420,000) (319,332)
Options expired prior to exercise..................................................... 0 0
Options exercised..................................................................... 0 0
-------------------- ------------
Options outstanding at October 31, 1995............................................... 0 $ 0
-------------------- ------------
-------------------- ------------
</TABLE>
6. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Service,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Strategic
Income Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Strategic Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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, 1995 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 Strategic Income Fund as of October 31, 1995, 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 15, 1995
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 61
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (88.2%)
Argentina (4.8%)
Republic of Argentina:
Discount Bond, 6.875% due 3/31/23+ ............... USD 22,500,000 $ 12,684,375 2.3
Par Bond, 5% due 3/31/23++ ........................ USD 15,600,000 7,449,000 1.4
Floating Rate Bond, 6.8125% due 3/31/05+ .......... USD 7,500,000 4,443,750 0.8
BOCON Pre 2, 5.83% due 4/1/01[.] + ................ USD 2,150,000 1,751,713 0.3
Central Bank of Argentina, BONEX, 5.9375% due
12/28/99+ .......................................... USD 78,125 73,250 --
Australia (1.9%)
Australian Government, 7.5% due 7/15/05 ............. AUD 14,900,000 10,401,748 1.9
Brazil (4.8%)
Federal Republic of Brazil:
Par Z-L Bond, 4.25% due 4/15/24++ ................. USD 31,000,000 15,035,000 2.8
C Bond, 4% due 4/15/14 (Effective rate at year end
is 6.035%, including "payment-in-kind" bonds.)[.]
++ ............................................... USD 14,114,066 7,180,531 1.3
Debt Conversion Bond Series L, 6.875% due
4/15/12+ ......................................... USD 6,800,000 3,731,500 0.7
Earned Interest Bond, 6.8125% due 4/15/06+ ........ USD 400,000 265,000 --
Bulgaria (3.1%)
Bulgaria:
Discount Bond Series A, 6.75% due 7/28/24 -
EURO+ ............................................ USD 13,000,000 6,548,750 1.2
Discount Bond Series A, 6.75% due 7/28/24 - 144A+
{.} .............................................. USD 10,164,755 5,120,495 0.9
Past Due Interest Bond (IAB), 6.75% due 7/28/11 -
144A+ {.} ........................................ USD 8,146,553 3,599,758 0.7
Discount Bond Series B, 7.25% 7/28/24+ ............ USD 3,000,000 1,518,750 0.3
Canada (1.8%)
Canadian Government, 8.75% due 12/1/05 .............. CAD 12,200,000 9,856,194 1.8
Costa Rica (1.3%)
Banco Central de Costa Rica:
Principal Bond Series A, 6.25% due 5/21/10 ........ USD 6,300,000 3,685,500 0.7
Interest Bond Series A, 6.76563% due 5/21/05+ ..... USD 3,986,872 3,169,563 0.6
Denmark (2.0%)
Kingdom of Denmark, 7% due 12/15/04 ................. DKK 63,600,000 11,042,799 2.0
Ecuador (3.2%)
Ecuador:
Par Bond, 3% due 2/28/25 - 144A++ {.} ............. USD 17,999,000 5,984,668 1.1
Discount Bond, 6.8125% due 2/28/25 - EURO+ ........ USD 11,000,000 5,472,500 1.0
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective yield at year end is 4.27%, including
"payment-in-kind" bonds.)[.] + {.} ............... USD 9,989,113 3,321,380 0.6
Par Bond, 3% due 2/28/25 - EURO++ ................. USD 5,000,000 1,662,500 0.3
Earned Interest Bond, 6.75% due 12/21/04 - 144A+
{.} .............................................. USD 2,067,975 1,251,125 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 62
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
France (5.3%)
French Treasury Bond (BTAN), 7% due 10/12/00 ........ FRF 73,900,000 $ 15,366,544 2.8
France O.A.T., 7.25% due 4/25/06 .................... FRF 66,250,000 13,450,573 2.5
Germany (3.7%)
Deutschland Republic, 6.25% due 1/4/24 .............. DEM 32,000,000 20,104,313 3.7
Ireland (1.0%)
Irish Gilts, 6.25% due 10/18/04 ..................... IEP 3,800,000 5,472,836 1.0
Italy (7.9%)
Italian Buoni Poliennali del Tesoro (BTPS):
8.5% due 4/1/04 ................................... ITL 23,090,000,000 12,119,786 2.2
8.5% due 1/1/04 ................................... ITL 11,650,000,000 6,138,412 1.1
9.5% due 1/1/05 ................................... ITL 10,750,000,000 5,953,062 1.1
8.5% due 8/1/99 ................................... ITL 10,000,000,000 5,776,306 1.1
Republic of Italy:
5.125% due 7/29/03 ................................ JPY 1,194,000,000 13,273,481 2.4
Mexico (4.1%)
United Mexican States:
Par Bond Series B, 6.25% due 12/31/19+/+ ......... USD 20,900,000 12,317,938 2.3
Par Bond Series A, 6.25% due 12/31/19+/+ .......... USD 16,250,000 9,577,344 1.8
New Zealand (2.0%)
New Zealand Government:
6.5% due 2/15/00 ................................. NZD 8,625,000 5,544,377 1.0
8% due 11/15/06 ................................... NZD 7,815,000 5,450,752 1.0
Nigeria (2.3%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ +/+ ..................................... USD 26,000,000 12,171,250 2.2
Nigeria Promissory Notes, 5.092% due 1/5/10++ ....... USD 2,000,000 730,000 0.1
Philippines (2.1%)
Central Bank of the Philippines, Par Bond Series B,
5.75% due 12/1/17++ ................................ USD 15,600,000 11,446,500 2.1
Poland (4.2%)
Poland:
Past Due Interest Bond, 3.75% due 10/27/14 - 144A++
{.} .............................................. USD 21,990,000 13,908,675 2.5
Discount Bond, 6.875% due 10/27/24 - EURO+ ........ USD 9,000,000 6,896,250 1.3
Par Bond, 2.75% due 10/27/24 - 144A++ {.} ......... USD 4,318,000 1,921,510 0.4
Par Bond, 2.75% due 10/27/24 - EURO++ ............. USD 81,000 36,045 --
Portgual (1.0%)
Portuguese Government Bond, 11.875% due 2/23/05 ..... PTE 773,000,000 5,393,278 1.0
South Africa (0.6%)
Republic of South Africa, 9.625% due 12/15/99 ....... USD 2,880,000 3,067,200 0.6
Spain (3.8%)
Kingdom of Spain:
5.75% due 3/23/02 ................................. JPY 1,325,000,000 15,403,882 2.8
10% due 2/28/05 ................................... ESP 676,800,000 5,278,496 1.0
Sweden (4.0%)
Swedish Government, 13% due 6/15/01 ................. SEK 124,700,000 22,041,832 4.0
United Kingdom (2.2%)
United Kingdom Treasury, 7% due 11/6/01 ............. GBP 8,000,000 12,284,659 2.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 63
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
United States (17.3%)
United States Treasury Note:
6.875% due 3/31/00 ................................ USD 29,000,000 $ 30,169,077 5.5
7.75% due 11/30/99 ................................ USD 15,000,000 16,035,945 2.9
6.5% due 8/15/05 ................................. USD 5,400,000 5,583,940 1.0
United States Treasury Bond, 6.875% due 8/15/25 ..... USD 40,400,000 43,291,145 7.9
Uruguay (0.2%)
Banco Central del Uruguay, Par Bond Series A, 6.75%
due 2/18/21+/+ ..................................... USD 1,370,000 856,250 0.2
Venezuela (3.6%)
Republic of Venezuela:
Par Bond Series A, 6.75% due 3/31/20+/+ ........... USD 29,000,000 14,989,375 2.7
Debt Conversion Bond, 6.8125% due 12/18/07+ ....... USD 7,500,000 3,703,125 0.7
Discount Bond Series B, 6.9375% due 3/31/20+ +/
+ ................................................ USD 2,500,000 1,325,000 0.2
------------
Total Government & Government Agency Obligations (cost
$471,956,479) .......................................... 482,329,007
------------
Sovereign Debt (6.5%)
Morocco (4.8%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.6875%
due 1/1/09+ ........................................ USD 43,500,000 25,964,063 4.8
Russia (1.7%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- .............................. USD 28,500,000 9,226,163 1.7
------------
Total Sovereign Debt (cost $40,522,635) ................. 35,190,226
------------
Corporate Bonds (0.9%)
Brazil (0.5%)
Banco BCN - BCN Leasing, 11% due 6/9/97 - 144A{.} ... USD 2,500,000 2,462,500 0.5
Hong Kong (0.1%)
Pacific Concord Finance Ltd., Convertible Bond, 4.75%
due 12/10/98 ....................................... USD 1,000,000 795,000 0.1
India (0.1%)
Reliance Industries Ltd., 8.125% due 9/27/05 -
144A{.} ............................................ USD 700,000 705,250 0.1
Indonesia (0.2%)
Asia Pulp & Paper International Finance Co., Ltd.,
11.75% due 10/1/05 ................................. USD 850,000 872,048 0.2
------------
Total Corporate Bonds (cost $4,767,553) ................. 4,834,798
------------
Other Security (0.8%)
Argentina (0.8%)
Argentina Local Markets Trust 1994-1 Pre 2, 13.375%
due 4/15/01 - 144A{.} (cost $5,000,000) ........... USD 5,000,000 4,612,500 0.8
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $522,246,667) ...... 526,966,531 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 64
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- --------------------------------------------------------- -------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (0.5%)
Mexico (0.5%)
Mexican Cetes, effective yield 45.14%, due
9/26/96 ............................................ MXN 25,600,000 $ 2,543,209 0.5
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- --------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80% collateralized by $14,470,000 U.S. Treasury
Strips, due 5/15/05 (market value of collateral is
$8,089,969, including accrued interest). (cost
$7,902,273) ......................................... -- -- 7,902,273 1.4
------------ -----
TOTAL INVESTMENTS (cost $533,001,678) ................... 537,412,013 98.3
Other Assets and Liabilities ............................ 9,047,586 1.7
------------ -----
NET ASSETS .............................................. $546,459,599 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $546,459,599.
+ The coupon rate shown on floating rate note represents the rate at
period end.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} 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.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $535,702,133 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 16,996,004
Unrealized depreciation: (15,286,124)
-------------
Net unrealized appreciation: $ 1,709,880
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 65
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ------------------------------------------------------------------------------ ------------ ----------- --------- -------------
<S> <C> <C> <C> <C>
Australian Dollars............................................................ 5,899,101 1.32674 01/18/96 $ 80,344
Canadian Dollars.............................................................. 849,618 1.33990 12/18/95 (1,192)
Danish Kroner................................................................. 5,766,273 5.69380 11/14/95 233,939
Deutsche Marks................................................................ 12,097,061 1.45700 11/30/95 429,251
Deutsche Marks................................................................ 8,334,580 1.42383 11/30/95 108,468
Deutsche Marks................................................................ 16,409,308 1.41600 11/30/95 123,997
Deutsche Marks................................................................ 782,751 1.42380 11/30/95 10,171
Deutsche Marks................................................................ 11,741,265 1.42704 11/30/95 178,870
Deutsche Marks................................................................ 1,067,388 1.39500 11/30/95 (7,881)
Deutsche Marks................................................................ 5,457,909 1.39797 11/30/95 (28,618)
Deutsche Marks................................................................ 7,628,489 1.39266 01/24/96 (47,469)
Deutsche Marks................................................................ 5,066,630 1.38179 01/24/96 (71,633)
French Francs................................................................. 385,274 4.95845 12/04/95 5,186
Irish Punts................................................................... 323,785 0.61637 11/29/95 (695)
Italian Lira.................................................................. 538,717 1,608.60000 01/26/96 (851)
Japanese Yen.................................................................. 655,646 99.70000 12/18/95 (11,355)
Japanese Yen.................................................................. 2,741,883 99.64300 12/18/95 (49,081)
Japanese Yen.................................................................. 2,735,968 99.16200 12/18/95 (62,483)
Japanese Yen.................................................................. 2,721,179 98.89100 12/18/95 (69,773)
Pounds Sterling............................................................... 4,014,648 0.63788 01/16/96 17,013
Swedish Krona................................................................. 146,879 6.72800 01/05/96 1,330
Swedish Krona................................................................. 2,018,882 6.64000 01/05/96 (8,227)
------------ -------------
Total Contracts to Buy (Payable amount $96,553,923)......................... 97,383,234 829,311
------------ -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 17.82%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Danish Kroner................................................................. 5,766,273 5.51880 11/14/95 (58,510)
Danish Kroner................................................................. 11,713,546 5.54454 11/17/95 (173,003)
Deutsche Marks................................................................ 1,231,054 1.47210 11/30/95 (55,862)
Deutsche Marks................................................................ 14,395,503 1.47736 11/30/95 (702,158)
Deutsche Marks................................................................ 17,320,145 1.47716 11/30/95 (842,580)
Deutsche Marks................................................................ 2,264,701 1.40745 11/30/95 (3,460)
French Francs................................................................. 16,275,420 4.90645 12/04/95 (48,891)
French Francs................................................................. 6,602,150 5.08000 12/13/95 (243,882)
French Francs................................................................. 6,249,558 5.07865 12/13/95 (229,257)
French Francs................................................................. 838,044 4.93700 12/13/95 (7,580)
French Francs................................................................. 217,074 4.88700 12/13/95 237
Irish Punts................................................................... 5,698,615 0.63418 11/29/95 (148,103)
Italian Lira.................................................................. 2,860,910 1,634.55000 01/11/96 (46,680)
Italian Lira.................................................................. 1,138,145 1,609.60000 01/11/96 (1,216)
Italian Lira.................................................................. 5,131,731 1,637.27600 01/26/96 (81,910)
Italian Lira.................................................................. 5,474,686 1,628.90000 01/26/96 (59,682)
Japanese Yen.................................................................. 4,338,111 100.88000 12/18/95 23,507
Japanese Yen.................................................................. 5,718,419 102.15850 12/18/95 (40,967)
Japanese Yen.................................................................. 739,451 97.21000 12/18/95 32,075
New Zealand Dollars........................................................... 5,365,302 1.54086 11/29/95 (82,523)
Portuguese Escudos............................................................ 5,829,365 156.00000 11/20/95 (284,493)
Pounds Sterling............................................................... 220,412 0.63355 01/16/96 564
Spanish Pesetas............................................................... 5,446,641 120.17500 11/07/95 78,635
Swedish Krona................................................................. 10,904,362 7.03330 01/05/96 (567,820)
Swedish Krona................................................................. 3,146,703 6.80770 01/05/96 (65,009)
------------ -------------
Total Contracts to Sell (Receivable amount $141,277,753).................... 144,886,321 (3,608,568)
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 26.51%
Total Open Forward Foreign Currency Contracts, Net.......................... $(2,779,257)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 66
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $533,001,678)
(Note 1)............................................... $537,412,013
U.S. currency.............................. $ 440 --
Foreign currencies (cost $554,748)......... 555,044 555,484
--------
Receivable for securities sold.......................... 56,097,535
Interest receivable..................................... 13,665,276
Receivable for Fund shares sold......................... 236,106
Cash held as collateral for securities loaned (Note
1)..................................................... 43,729,013
------------
Total assets.......................................... 651,695,427
------------
Liabilities:
Payable for securities purchased........................ 56,250,305
Payable for open forward foreign currency contracts, net
(Note 1)............................................... 2,779,257
Payable for Fund shares repurchased..................... 1,410,456
Payable for service and distribution expenses (Note
2)..................................................... 361,364
Payable for investment management and administration
fees (Note 2).......................................... 338,404
Payable for printing and postage expenses............... 151,751
Payable for transfer agent fees (Note 2)................ 83,499
Payable for professional fees........................... 33,962
Payable for registration and filing fees (Note 2)....... 31,146
Payable for custodian fees (Note 1)..................... 25,818
Distribution payable.................................... 19,666
Payable for fund accounting fees (Note 2)............... 11,792
Payable for Directors' fees and expenses (Note 2)....... 5,451
Other accrued expenses.................................. 3,944
Collateral for securities loaned (Note 1)............... 43,729,013
------------
Total liabilities..................................... 105,235,828
------------
Net assets................................................ $546,459,599
------------
------------
Class A:
Net asset value and redemption price per share
($188,164,713 DIVIDED BY 18,225,463 shares
outstanding)............................................. $ 10.32
------------
------------
Maximum offering price per share (100/95.25 of
$10.32) *................................................ $ 10.83
------------
------------
Class B:+
Net asset value and offering price per share ($357,852,132
DIVIDED BY 34,647,303 shares outstanding)................ $ 10.33
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption
price per share ($442,754 DIVIDED BY 42,881 shares
outstanding)............................................. $ 10.33
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................ $697,904,342
Accumulated net investment loss......................... (68,169)
Accumulated net realized loss on investments and foreign
currency transactions.................................. (152,991,131)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies...................... (2,795,778)
Net unrealized appreciation of investments.............. 4,410,335
------------
Total -- representing net assets applicable to capital
shares outstanding....................................... $546,459,599
------------
------------
<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 67
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of
$181,612).................................................. $ 65,875,609
------------
Total investment income................................... 65,875,609
------------
Expenses:
Service and distribution expenses: (Note 2)
Class A.................................. $ 746,208
Class B.................................. 3,820,587 4,566,795
------------
Investment management and administration fees (Note 2)...... 4,293,053
Transfer agent fees (Note 2)................................ 1,218,500
Custodian fees (Note 1)..................................... 318,141
Printing and postage expenses............................... 289,500
Fund accounting fees (Note 2)............................... 150,989
Registration and filing fees................................ 123,758
Audit fees.................................................. 64,970
Legal fees.................................................. 36,500
Directors' fees and expenses (Note 2)....................... 20,950
Insurance expenses.......................................... 8,785
------------
Total expenses before reductions.......................... 11,091,941
------------
Expense reductions (Note 1)............................. (135,405)
------------
Total net expenses........................................ 10,956,536
------------
Net investment income......................................... 54,919,073
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... (69,013,143)
Net realized loss on foreign currency
transactions.............................. (13,662,464)
------------
Net realized loss during the year......................... (82,675,607)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (3,747,114)
Net change in unrealized appreciation of
investments............................... 35,939,954
------------
Net unrealized appreciation during the year............... 32,192,840
------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (50,482,767)
------------
Net increase in net assets resulting from operations.......... $ 4,436,306
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 68
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 54,919,073 $ 47,861,136
Net realized loss on investments and
foreign currency transactions............. (82,675,607) (79,354,248)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (3,747,114) (9,380)
Net change in unrealized appreciation
(depreciation) of investments............. 35,939,954 (66,692,413)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 4,436,306 (98,194,905)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (16,844,112) (21,322,221)
From net realized gain on investments...... -- (8,450,873)
Return of capital.......................... (852,171) (4,442,690)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (27,777,018) (29,594,068)
From net realized gain on investments...... -- (10,411,111)
Return of capital.......................... (1,405,284) (5,633,875)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (14,952) --
Return of capital.......................... (756) --
----------------- -----------------
Total distributions...................... (46,894,293) (79,854,838)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 194,343,201 654,688,923
Decrease from capital shares repurchased... (339,216,716) (341,148,524)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (144,873,515) 313,540,399
----------------- -----------------
Total increase (decrease) in net assets...... (187,331,502) 135,490,656
Net assets:
Beginning of year.......................... 733,791,101 598,300,445
----------------- -----------------
End of year................................ $ 546,459,599 $ 733,791,101
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 69
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------
1995(E) 1994 1993(E) 1992 1991
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20
----------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income................. 0.97 0.79 0.96 0.86 0.84**
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 0.31 (0.02)
----------- ----------- ----------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.28 (1.35) 3.81 1.17 0.82
----------- ----------- ----------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.80) (0.79) (0.96) (0.83) (0.60)
From net realized gain on
investments.......................... -- (0.38) (0.37) -- (0.51)
Return of capital..................... (0.04) (0.21) -- -- --
From sources other than net investment
income............................... -- -- (0.12) -- --
----------- ----------- ----------- ---------- ----------
Total distributions................. (0.84) (1.38) (1.45) (0.83) (1.11)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period.......... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91
----------- ----------- ----------- ---------- ----------
----------- ----------- ----------- ---------- ----------
Total investment return (c)............. 3.06% (10.44)% 37.0% 11.1% 7.7%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 188,165 $ 275,241 $ 287,870 $ 83,849 $ 55,967
Ratio of net investment income to
average net assets..................... 9.64% 6.74% 7.2% 7.6% 7.2%**
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.42% 1.40% 1.7% 1.8% 1.9%**
Without expense reductions............ 1.45% --%* --%* --%* --%*
Ratio of interest expense to average net
assets................................. N/A 0.10% N/A N/A N/A
Portfolio turnover rate++++............. 238% 583% 310% 418% 630%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) Ratios not meaningful due to short period of operation of Class B
shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.01 for the year ended October 31, 1991.
Without such reimbursement, the expense ratio would have been 1.92%
and the ratio of net investment income to average net asssets would
have been 7.16% for the year ended October 31, 1991.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 70
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
------------------------------------------------------- CLASS+++
-------------
YEAR ENDED OCTOBER 22, 1992 JUNE 1, 1995
OCTOBER 31, TO TO
------------------------------------ OCTOBER 31, OCTOBER 31,
1995(E) 1994 1993(E) 1992 1995(E)
--------- ---------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 13.60 $ 11.24 $11.36 $ 10.32
--------- ---------- ----------- ------- -------------
Income from investment operations:
Net investment income................. 0.91 0.73 0.89 0.01 0.41
Net realized and unrealized gain
(loss) on investments................ (0.69) (2.14) 2.85 (0.13) (0.04)
--------- ---------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 0.22 (1.41) 3.74 (0.12) 0.37
--------- ---------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ (0.73) (0.72) (0.89) -- (0.34)
From net realized gain on
investments.......................... -- (0.38) (0.37) -- --
Return of capital..................... (0.04) (0.21) -- -- (0.02)
From sources other than net investment
income............................... -- -- (0.12) -- --
--------- ---------- ----------- ------- -------------
Total distributions................. (0.77) (1.31) (1.38) -- (0.36)
--------- ---------- ----------- ------- -------------
Net asset value, end of period.......... $ 10.33 $ 10.88 $ 13.60 $11.24 $ 10.33
--------- ---------- ----------- ------- -------------
--------- ---------- ----------- ------- -------------
Total investment return (c)............. 2.48% (11.02)% 36.2% (1.1)%(b) 3.72%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $357,852 $458,550 $310,431 $ 533 $ 443
Ratio of net investment income to
average net assets..................... 8.99% 6.09% 6.5% N/A(d) 9.99%(a)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 2.07% 2.05% 2.4% N/A(d) 1.07%(a)
Without expense reductions............ 2.10% --%* --%* --%* 1.10%(a)
Ratio of interest expense to average net
assets................................. N/A 0.10% N/A N/A N/A
Portfolio turnover rate++++............. 238% 583% 310% 418% 238%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) Ratios not meaningful due to short period of operation of Class B
shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.01 for the year ended October 31, 1991.
Without such reimbursement, the expense ratio would have been 1.92%
and the ratio of net investment income to average net asssets would
have been 7.16% for the year ended October 31, 1991.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 71
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Strategic Income 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 twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 72
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities." 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
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option. The
current market value of an option listed on a traded exchange is valued at its
last bid price, or, in the case of an over-the-counter option, is valued at the
average last bid prices obtained from brokers. 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 portfolio 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 Fund may use options to manage its exposure
to the bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 73
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the bond market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $39,303,687
were on loan to brokers. The loans were secured by cash collateral of
$43,729,013 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the period ended October 31, 1995, the Fund received fees of $135,405 which were
used to reduce the Fund's custodian fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$151,873,284, of which $77,456,193 expires in 2002 and $74,417,091 expires in
2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currences, 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.
(M) 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.
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 0.725% on the first $500 million of average daily net assets of the
Fund; 0.70% on the next $1 billion; 0.675% on the next $1 billion and
Statement of Additional Information Page 74
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
0.65% on amounts thereafter. These fees are computed daily and paid monthly, and
are subject to reduction in any year to the extent that the Fund's 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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$68,458 of such sales charges. Purchases of Class A Shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $88,302 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $2,355,668. 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $34,980 to G.T. Capital.
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
Statement of Additional Information Page 75
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
$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, 1995, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $1,084,339,117 and $1,234,939,423, respectively.
Purchases and sales of U.S. government obligations by the Fund aggregated
$247,139,247 and $184,605,981, respectively.
4. CAPITAL SHARES
At October 31, 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
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; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS A: SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 10,413,395 $ 105,118,727 19,809,908 $ 246,272,141
Shares issued in connection with reinvestment of distributions............ 1,180,205 11,913,775 1,971,428 23,827,880
----------- ------------- ----------- -------------
11,593,600 117,032,502 21,781,336 270,100,021
Shares repurchased........................................................ (18,672,585) (187,700,412) (17,632,683) (210,355,215)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (7,078,985) $ (70,667,910) 4,148,653 $ 59,744,806
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
CLASS B: SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 5,950,544 $ 60,333,373 28,502,079 $ 357,951,389
Shares issued in connection with reinvestment of distributions............ 1,633,228 16,496,489 2,229,217 26,637,513
----------- ------------- ----------- -------------
7,583,772 76,829,862 30,731,296 384,588,902
Shares repurchased........................................................ (15,079,063) (151,484,130) (11,406,753) (130,793,309)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (7,495,291) $ (74,654,268) 19,324,543 $ 253,795,593
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS: SHARES AMOUNT
- -------------------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 44,461 $ 465,129
Shares issued in connection with reinvestment of distributions............ 1,535 15,708
----------- -------------
45,996 480,837
Shares repurchased........................................................ (3,115) (32,174)
----------- -------------
Net increase.............................................................. 42,881 $ 448,663
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 76
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
5. WRITTEN OPTIONS:
The Fund's written option contracts activity for the year ended October 31,
1995, was as follows:
COVERED CALL AND PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
------------- ----------
<S> <C> <C>
Options outstanding at October 31, 1994................. 0 $ 0
Options written......................................... 27,250,000 284,000
Options cancelled in closing purchase transactions
($52,000 gain realized)................................ (16,000,000) (192,000)
Options expired prior to exercise....................... (11,250,000) (92,000)
Options exercised....................................... 0 0
------------- ----------
Options outstanding at October 31, 1995................. 0 $ 0
------------- ----------
------------- ----------
</TABLE>
6. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 77
<PAGE>
GT GLOBAL HIGH INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global High Income Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global High Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the three years in the period then ended and for the period from October
22, 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, 1995 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 High Income Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from October 22,
1992 (commencement of operations) to October 31, 1992, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 78
<PAGE>
GT GLOBAL HIGH INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global High Income Portfolio (cost
$349,571,820) (Note 1)........................... $358,680,666
Receivable for Fund shares sold................... 2,159,244
Unamortized organizational costs (Note 1)......... 60,379
------------
Total assets.................................... 360,900,289
------------
Liabilities:
Payable for Fund shares repurchased............... 1,988,431
Payable for service and distribution expenses
(Note 2)......................................... 216,771
Payable for printing and postage expenses......... 98,101
Payable for administration fees (Note 2).......... 76,834
Payable for transfer agent fees (Note 2).......... 55,188
Payable for professional fees..................... 26,550
Payable for registration and filing fees.......... 22,725
Payable for fund accounting fees (Note 2)......... 7,738
Payable for insurance expenses.................... 3,452
Payable for Directors' fees and expenses (Note
2)............................................... 2,297
Other accrued expenses............................ 39,875
------------
Total liabilities............................... 2,537,962
------------
Net assets.......................................... $358,362,327
------------
------------
Class A:
Net asset value and redemption price per share
($142,001,916 DIVIDED BY 12,132,732 shares
outstanding)....................................... $ 11.70
------------
------------
Maximum offering price per share (100/95.25 of
$11.70) *.......................................... $ 12.28
------------
------------
Class B:+
Net asset value and offering price per share
($214,897,134 DIVIDED BY 18,379,051 shares
outstanding)....................................... $ 11.69
------------
------------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($1,463,277 DIVIDED BY
124,997 shares outstanding)........................ $ 11.71
------------
------------
Net assets consist of:
Paid in capital (Note 3).......................... $408,061,273
Accumulated net realized loss on investments and
foreign currency transactions.................... (58,807,792)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global High Income Portfolio..................... 6,235
Net unrealized appreciation of investments --
Global High Income Portfolio..................... 9,102,611
------------
Total -- representing net assets applicable to
capital shares outstanding......................... $358,362,327
------------
------------
<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 79
<PAGE>
GT GLOBAL HIGH INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global High Income Portfolio............. $ 46,834,087
------------
Total investment income................................... 46,834,087
------------
Expenses:
Expenses -- Global High Income Portfolio.................... 2,696,978
Service and distribution expenses: (Note 2)
Class A.................................. $ 486,107
Class B.................................. 2,048,951 2,535,058
------------
Administration fees (Note 2)................................ 860,884
Transfer agent fees (Note 2)................................ 657,200
Printing and postage expenses............................... 202,425
Registration and filing fees................................ 131,000
Audit fees.................................................. 92,260
Fund accounting fees (Note 2)............................... 79,660
Legal fees.................................................. 32,958
Amortization of organization costs (Note 1)................. 29,802
Directors' fees and expenses (Note 2)....................... 15,950
Insurance expenses.......................................... 7,477
Other expenses.............................................. 1,000
------------
Total expenses.............................................. 7,342,652
------------
Net investment income......................................... 39,491,435
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
High Income Portfolio..................... (61,405,151)
Net realized loss on foreign currency
transactions -- Global High Income
Portfolio................................. (707,803)
------------
Net realized loss during the year......................... (62,112,954)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global High Income
Portfolio................................. (302)
Net change in unrealized appreciation of
investments -- Global High Income
Portfolio................................. 24,969,833
------------
Net unrealized appreciation during the year............... 24,969,531
------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (37,143,423)
------------
Net increase in net assets resulting from operations.......... $ 2,348,012
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 80
<PAGE>
GT GLOBAL HIGH INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 39,491,435 $ 23,589,347
Net realized loss on investments and
foreign currency transactions -- Global
High Income Portfolio..................... (62,112,954) (170,977)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies --
Global High Income Portfolio.............. (302) (517,677)
Net change in unrealized appreciation
(depreciation) of investments -- Global
High Income Portfolio..................... 24,969,833 (39,147,066)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 2,348,012 (16,246,373)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (12,528,224) (11,509,080)
From net realized gain on investments...... (474,126) (3,211,912)
In excess of net realized gain on
investments............................... -- (2,599,203)
Return of capital.......................... (737,846) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (17,274,071) (12,080,267)
From net realized gain on investments...... (622,059) (3,255,413)
In excess of net realized gain on
investments............................... -- (2,634,405)
Return of capital.......................... (1,015,555) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (54,186) --
Return of capital.......................... (3,075) --
----------------- -----------------
Total distributions...................... (32,709,142) (35,290,280)
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 418,666,106 644,572,576
Decrease from capital shares repurchased... (430,339,278) (462,844,981)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (11,673,172) 181,727,595
----------------- -----------------
Total increase (decrease) in net assets...... (42,034,302) 130,190,942
Net assets:
Beginning of year.......................... 400,396,629 270,205,687
----------------- -----------------
End of year................................ $ 358,362,327 $ 400,396,629
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 81
<PAGE>
GT GLOBAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------
OCTOBER 22,
1992
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED OCTOBER 31, TO
------------------------------------- OCTOBER 31,
1995 1994(e) 1993(e) 1992
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.56 $ 14.92 $ 11.43 $ 11.43
----------- ----------- ----------- -------
Income from investment operations:
Net investment income................. 1.35 0.94 0.78 --
Net realized and unrealized gain
(loss) on investments................ (1.09) (1.87) 3.92 --
----------- ----------- ----------- -------
Net increase (decrease) from
investment operations.............. 0.26 (0.93) 4.70 --
----------- ----------- ----------- -------
Distributions to shareholders:
From net investment income............ (1.03) (0.94) (0.78) --
From net realized gain on
investments.......................... (0.03) (0.27) -- --
In excess of net realized gain on
investments.......................... -- (0.22) -- --
From sources other than net investment
income............................... -- -- (0.43) --
Return of capital..................... (0.06) -- -- --
----------- ----------- ----------- -------
Total distributions................. (1.12) (1.43) (1.21) --
----------- ----------- ----------- -------
Net asset value, end of period.......... $ 11.70 $ 12.56 $ 14.92 $ 11.43
----------- ----------- ----------- -------
----------- ----------- ----------- -------
Total investment return (d)............. 2.81% (6.45)% 43.6% -- %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 142,002 $ 167,974 $ 143,171 $ 207
Ratio of net investment income to
average net assets..................... 11.85% 7.0% 6.4% N/A(c)
Ratio of expenses to average net
assets................................. 1.75% 1.57% 2.2% N/A(c)
Ratio of interest expense to average net
assets................................. N/A 0.22% N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor class shares.
(a) Not annualized.
(b) Annualized.
(c) Ratios not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share data were calculated based upon weighted
average shares during the year.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GT GLOBAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------
OCTOBER 22, ADVISOR
1992 CLASS+++
(COMMENCEMENT -------------
OF OPERATIONS) JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO TO
------------------------------------- OCTOBER 31, OCTOBER 31,
1995 1994(e) 1993(e) 1992 1995
----------- ----------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.56 $ 14.90 $ 11.43 $ 11.43 $ 11.44
----------- ----------- ----------- ------- -------------
Income from investment operations:
Net investment income................. 1.27 0.86 0.70 -- 0.57
Net realized and unrealized gain
(loss) on investments................ (1.09) (1.85) 3.90 -- 0.17
----------- ----------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 0.18 (0.99) 4.60 -- 0.74
----------- ----------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ (0.96) (0.86) (0.70) -- (0.44)
From net realized gain on
investments.......................... (0.03) (0.27) -- -- --
In excess of net realized gain on
investments.......................... -- (0.22) -- -- --
From sources other than net investment
income............................... -- -- (0.43) -- --
Return of capital..................... (0.06) -- -- -- (0.03)
----------- ----------- ----------- ------- -------------
Total distributions................. (1.05) (1.35) (1.13) -- (0.47)
----------- ----------- ----------- ------- -------------
Net asset value, end of period.......... $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 11.71
----------- ----------- ----------- ------- -------------
----------- ----------- ----------- ------- -------------
Total investment return (d)............. 2.07% (6.99)% 42.6% -- %(a) 6.54%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 214,897 $ 232,423 $ 127,035 $ 53 $ 1,463
Ratio of net investment income to
average net assets..................... 11.20% 6.35% 5.8% N/A(c) 12.20%(b)
Ratio of expenses to average net
assets................................. 2.40% 2.22% 2.8% N/A(c) 1.40%(b)
Ratio of interest expense to average net
assets................................. N/A 0.22% N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor class shares.
(a) Not annualized.
(b) Annualized.
(c) Ratios not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share data were calculated based upon weighted
average shares during the year.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GT GLOBAL HIGH INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global High Income 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
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 High Income 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 Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
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
$54,325,425 which expires in 2003.
(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 initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $149,100. 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
Statement of Additional Information Page 84
<PAGE>
GT GLOBAL HIGH INCOME FUND
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$67,403 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $61,729 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $1,276,245. In addition, G.T. Global makes on-going 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 2.20%, 2.85%, and 1.85% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T.
Capital ("G.T. Funds") and 0.02% to the assets in excess of $5 billion and
dividing the result by the aggregate assets of the G.T. Funds. For the period
ended October 31, 1995, the Fund paid fund accounting fees of $22,563 to G.T.
Capital.
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. CAPITAL SHARES
At October 31, 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;
Statement of Additional Information Page 85
<PAGE>
GT GLOBAL HIGH 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 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 Consumer Products and
Services Fund. 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.
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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
--------------------------- ---------------------------
CLASS A: SHARES AMOUNT SHARES AMOUNT
- ------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................... 25,003,318 $ 280,486,242 25,772,262 $ 337,096,408
Shares issued in connection
with reinvestment of
distributions............... 682,971 7,764,542 908,473 12,121,929
----------- ------------- ----------- -------------
25,686,289 288,250,784 26,680,735 349,218,337
Shares repurchased............ (26,927,729) (301,862,112) (22,900,774) (305,091,442)
----------- ------------- ----------- -------------
Net increase (decrease)....... (1,241,440) $ (13,611,328) 3,779,961 $ 44,126,895
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
--------------------------- ---------------------------
CLASS B: SHARES AMOUNT SHARES AMOUNT
- ------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................... 10,582,935 $ 119,426,735 21,671,430 $ 286,814,947
Shares issued in connection
with reinvestment of
distributions............... 826,797 9,372,626 646,902 8,539,292
----------- ------------- ----------- -------------
11,409,732 128,799,361 22,318,332 295,354,239
Shares repurchased............ (11,542,431) (128,317,008) (12,332,246) (157,753,539)
----------- ------------- ----------- -------------
Net increase (decrease)....... (132,699) $ 482,353 9,986,086 $ 137,600,700
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
---------------------------
ADVISOR CLASS: SHARES AMOUNT
- ------------------------------ ----------- -------------
<S> <C> <C>
Shares sold................... 133,919 $ 1,558,699
Shares issued in connection
with reinvestment of
distributions............... 4,923 57,262
----------- -------------
138,842 1,615,961
Shares repurchased............ (13,845) (160,158)
----------- -------------
Net increase.................. 124,997 $ 1,455,803
----------- -------------
----------- -------------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.," and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$334,343 as capital gain dividends for the fiscal year ended October 31, 1995.
Statement of Additional Information Page 86
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global High Income Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
High Income Portfolio, including the portfolio of investments as of October 31,
1995, 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 supplementary data for each of the three years in the period then
ended and for the period from October 22, 1992 (commencement of operations) to
October 31, 1992. 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
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
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, 1995 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 supplementary data referred to
above present fairly, in all material respects, the financial position of Global
High Income Portfolio as of October 31, 1995, 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 supplementary data for each of the three years in
the period then ended and for the period from October 22, 1992 (commencement of
operations) to October 31, 1992, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 87
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (70.7%)
Argentina (10.7%)
Republic of Argentina:
Par Bond, 5% due 3/31/23++ ......................... USD 35,000,000 $ 16,712,500 4.7
Discount Bond, 6.875% due 3/31/23+ ................. USD 17,100,000 9,640,125 2.7
BOCON Pre 2, 5.83% due 4/1/01[.] + ................. USD 5,676,301 4,631,910 1.3
8.375% due 12/20/03 ................................ USD 6,240,000 4,539,600 1.3
Floating Rate Bond, 6.8125% due 3/31/05+ ........... USD 4,500,000 2,666,250 0.7
Brazil (13.2%)
Federal Republic of Brazil:
Par Z-L Bond, 4.25% due 4/15/24++ .................. USD 32,400,000 15,714,000 4.4
C Bond, 4% due 4/15/14 (Effective rate at year end
is 6.035%, including "payment-in-kind" shares.)[.]
++ ................................................ USD 26,530,200 13,497,239 3.8
New Money Bond Series L, 6.875% due 4/15/09+ ....... USD 10,500,000 6,168,750 1.7
Debt Conversion Bond Series L, 6.875% due
4/15/12+ .......................................... USD 11,000,000 6,036,250 1.7
IDU Notes, 6.6875% due 1/1/01+ ..................... USD 6,536,000 5,580,110 1.6
Bulgaria (4.8%)
Bulgaria:
Discount Bond Series A, 6.75% due 7/28/24 -
Euro+ ............................................ USD 13,032,000 6,564,870 1.8
Front Loaded Interest Reduction Bond Series A, 2%
due 7/28/12++ ..................................... USD 21,000,000 5,880,000 1.6
Discount Bond Series A, 6.75% due 7/28/24 - 144A+
{.} ............................................... USD 7,468,426 3,762,220 1.0
Discount Bond Series B, 7.25% due 7/28/24 - Euro+ .... USD 3,000,000 1,518,750 0.4
Costa Rica (2.4%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.76563% due 5/21/05+ ...... USD 8,876,432 7,056,763 2.0
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 2,700,000 1,579,500 0.4
Ecuador (4.1%)
Ecuador:
Par Bond, 3% due 2/28/25 - 144A++ {.} .............. USD 17,000,000 5,652,500 1.6
Par Bond, 3% due 2/28/25 - Euro++ .................. USD 10,750,000 3,574,375 1.0
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective rate at year end is 4.27%, including
"payment-in-kind" shares.)[.] + {.} .............. USD 8,883,865 2,953,885 0.8
Discount Bond, 6.8125% due 2/28/25 - Euro+ ......... USD 3,500,000 1,741,250 0.5
Earned Interest Bond, 6.75% due 12/21/04 - 144A+
{.} ............................................... USD 1,330,875 805,179 0.2
Mexico (8.3%)
United Mexican States:
Par Bond Series B, 6.25% due 12/31/19+/+ ........... USD 30,250,000 17,828,594 5.0
Par Bond Series A, 6.25% due 12/31/19+/+ ........... USD 15,500,000 9,135,313 2.5
Discount Bond Series A, 6.76563% due 12/31/19+ +/
+ ................................................. USD 4,500,000 3,015,000 0.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 88
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Nigeria (3.9%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ +/+ ...................................... USD 28,750,000 $ 13,458,594 3.7
Nigeria Promissory Notes, 5.092% due 1/5/10++ ........ USD 2,500,000 912,500 0.2
Panama (0.5%)
Panama, Interest Reduction Bond, When-issued - 3.5%,
due 6/30/14 - 144A++ {.} -/- ........................ USD 4,700,000 1,809,500 0.5
Philippines (3.9%)
Central Bank of the Philippines:
Par Bond Series B, 5.75% due 12/1/17++ ............. USD 16,000,000 11,740,000 3.3
Front Loaded Interest Reduction Bond Series B, 5%
due 6/1/08++ ...................................... USD 3,000,000 2,295,000 0.6
Poland (10.1%)
Poland:
Past Due Interest Bond, 3.75% due 10/27/14 - 144A++
{.} ............................................... USD 25,162,000 15,914,965 4.4
Discount Bond, 6.875% due 10/27/24 - Euro+ ......... USD 19,967,000 15,299,714 4.3
Past Due Interest Bond, 3.75% due 10/27/14 -
Euro++ ............................................ USD 8,000,000 5,160,000 1.4
South Africa (3.2%)
Republic of South Africa:
11.5% due 5/30/00 ................................. ZAR 30,050,000 7,442,247 2.1
9.625% due 12/15/99 ................................ USD 3,600,000 3,834,000 1.1
Uruguay (1.5%)
Banco Central del Uruguay:
New Money Bond, 6.875% due 2/18/06+ ................ USD 3,750,000 2,718,750 0.8
Par Bond Series A, 6.75% due 2/18/21+/+ ............ USD 2,290,000 1,431,250 0.4
Par Bond Series B, 6.75% due 2/18/21+/+ ............ USD 1,500,000 937,500 0.3
Venezuela (4.1%)
Republic of Venezuela:
Discount Bond Series A, 6.6875% due 3/31/20+ +/+ ... USD 9,925,000 5,260,250 1.5
Discount Bond Series B, 6.9375% due 3/31/20+ +/+ ... USD 7,000,000 3,710,000 1.0
Par Bond Series A, 6.75% due 3/31/20+/+ ............ USD 5,750,000 2,972,031 0.8
Front Loaded Interest Reduction Bond Series A,
6.8125% due 3/31/07+ .............................. USD 2,750,000 1,381,875 0.4
Par Bond Series B, 6.75% due 3/31/20+/+ ............ USD 2,500,000 1,292,188 0.4
------------
Total Government & Government Agency Obligations (cost
$242,911,251) ........................................... 253,825,297
------------
Sovereign Debt (11.5%)
Morocco (4.7%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.6875%
due 1/1/09+ ........................................ USD 28,000,000 16,712,500 4.7
Peru (2.0%)
Peru Loan Agreement ** -/- ........................... USD 9,200,000 6,348,000 1.8
Peru Loan Agreement (Citibank Issued) ** -/- ........ USD 1,000,000 690,000 0.2
Russia (4.8%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- ............................... USD 53,000,000 17,157,425 4.8
------------
Total Sovereign Debt (cost $39,833,286) .................. 40,907,925
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 89
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (6.4%)
Brazil (0.8%)
Banco BCN - BCN Leasing, 11% due 6/9/97 - 144A{.} .... USD 3,000,000 $ 2,955,000 0.8
Colombia (0.4%)
Oleoducto Central S.A. (OCENSA), 9.35% due 9/1/05 -
144A{.} ............................................. USD 1,500,000 1,511,250 0.4
Hong Kong (0.4%)
Pacific Concord Finance Ltd., Convertible Bond, 4.75%
due 12/10/98 ........................................ USD 2,000,000 1,590,000 0.4
India (0.2%)
Reliance Industries Ltd., 8.125% due 9/27/05 -
144A{.} ............................................. USD 700,000 705,250 0.2
Indonesia (2.6%)
PT Polysindo Eka Perkasa, effective yield 23.23%, due
7/27/97 ............................................. IDR 12,000,000,000 3,766,520 1.0
Dharmala Sakti Sejahtera Promissory Note, effective
yield 23.10%, due 6/9/97 ............................ IDR 9,000,000,000 2,892,291 0.8
PT Tjiwi Kimia, 13.25% due 8/1/01 .................... USD 1,000,000 1,097,500 0.3
Asia Pulp & Paper International Finance Co., Ltd.,
11.75% due 10/1/05 ................................. USD 1,000,000 1,025,939 0.3
PT Indah Kiat, 8.875% due 11/1/00 ................... USD 800,000 768,000 0.2
Malaysia (0.5%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 ............................................. USD 2,000,000 1,630,000 0.5
Philippines (0.9%)
Philippine Long Distance Telephone, 9.875% due
8/1/05 .............................................. USD 2,000,000 2,085,000 0.6
Philippine National Power, 9% due 7/5/02 ............. USD 1,000,000 1,030,000 0.3
South Africa (0.6%)
Sappi BVI Finance Ltd., Convertible Bond, 7.5% due
8/1/02 - 144A{.} .................................... USD 2,000,000 2,030,000 0.6
------------
Total Corporate Bonds (cost $23,474,518) ................ 23,086,750
------------
Structured Notes (1.2%)
Argentina (1.2%)
Republic of Argentina, BOCON Pre 2 Linked Note,
13.875%due 4/2/01 (Issued by Bankers Trust New York
Corporation. The underlying asset is Republic of
Argentina BOCON Pre 2.) (cost $5,000,000) .......... USD 5,000,000 4,259,500 1.2
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $311,219,055) ....... 322,079,472 89.8
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (3.7%)
Mexico (3.7%)
Mexican Cetes: ....................................... MXN -- -- 3.7
Effective yield 47.33%, due 3/20/96 ............... -- 54,000,000 6,405,219 --
Effective yield 47.57%, due 3/28/96 ............... -- 31,000,000 3,641,716 --
Effective yield 45.14%, due 9/26/96 ............... -- 33,500,000 3,328,027 --
------------
Total Treasury Bills (cost $15,091,791) ................. 13,374,962
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 90
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (0.5%)
Indonesia (0.5%)
PT Indah Kiat Pulp & Paper Corp., effective
yield16.88%, due 3/21/96 (cost $1,693,821) ........ IDR 4,000,000,000 $ 1,652,844 0.5
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $16,785,612) .......... 15,027,806 4.2
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80% collateralized by $3,640,000 U.S. Treasury
Strips, due 2/15/02 (market value of collateral is
$2,519,129, including accrued interest). (cost
$2,438,393) .......................................... 2,438,393 0.7
------------ -----
TOTAL INVESTMENTS (cost $330,443,060) .................... 339,545,671 94.7
Other Assets and Liabilities ............................. 19,135,095 5.3
------------ -----
NET ASSETS ............................................... $358,680,766 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $358,680,766.
+ The coupon rate shown on floating rate note represents the rate at
period end.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} 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.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) shares.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $334,925,427 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 17,054,207
Unrealized depreciation: (12,433,963)
-------------
Net unrealized appreciation: $ 4,620,244
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 91
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$330,443,060) (Note 1)........................... $339,545,671
U.S. currency..................................... 658
Receivable for securities sold.................... 14,709,780
Interest receivable............................... 9,226,637
Unamortized organizational costs (Note 1)......... 9,886
------------
Total assets.................................... 363,492,632
------------
Liabilities:
Payable for securities purchased.................. 4,448,672
Payable for investment management and
administration fees (Note 2)..................... 209,120
Payable for custodian fees (Note 1)............... 25,012
Payable for printing and postage expenses......... 22,733
Payable for professional fees..................... 19,894
Payable for Trustees' fees and expenses (Note
2)............................................... 2,815
Other accrued expenses............................ 83,620
------------
Total liabilities............................... 4,811,866
------------
Net assets.......................................... $358,680,766
------------
------------
Net assets consist of:
Paid in capital................................... $323,645,829
Undistributed net investment income............... 78,582,766
Accumulated net realized loss on investments and
foreign currency transactions.................... (52,656,675)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 6,235
Net unrealized appreciation of investments........ 9,102,611
------------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $358,680,766
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 92
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of
$37,276)................................................... $ 46,834,087
------------
Total investment income................................... 46,834,087
------------
Expenses:
Investment management and administration fees (Note 2)...... 2,411,786
Custodian fees (Note 1)..................................... 230,918
Legal fees.................................................. 16,972
Audit fees.................................................. 15,550
Trustees' fees and expenses (Note 2)........................ 6,935
Amortization of organization costs (Note 1)................. 4,997
Printing and postage expenses............................... 2,520
Other expenses.............................................. 7,300
------------
Total expenses.............................................. 2,696,978
------------
Net investment income......................................... 44,137,109
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $(61,405,151)
Net realized loss on foreign currency
transactions.............................. (707,803)
------------
Net realized loss during the year......................... (62,112,954)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ (302)
Net change in unrealized appreciation of
investments............................... 24,969,840
------------
Net unrealized appreciation during the year............... 24,969,538
------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (37,143,416)
------------
Net increase in net assets resulting from operations.......... $ 6,993,693
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 93
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 44,137,109 $ 27,856,747
Net realized loss on investments and
foreign currency transactions............. (62,112,954) (170,977)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... (302) (517,677)
Net change in unrealized appreciation
(depreciation) of investments............. 24,969,840 (39,147,073)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 6,993,693 (11,978,980)
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 322,934,028 632,988,502
Withdrawals................................ (372,158,223) (476,837,876)
----------------- -----------------
Net increase (decrease) from beneficial
interest transactions................... (49,224,195) 156,150,626
----------------- -----------------
Total increase (decrease) in net assets...... (42,230,502) 144,171,646
Net assets:
Beginning of year.......................... 400,911,268 256,739,622
----------------- -----------------
End of year................................ $ 358,680,766 $ 400,911,268
----------------- -----------------
----------------- -----------------
</TABLE>
Statement of Additional Information Page 94
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
OCTOBER 22, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1995 1994 1993 OCTOBER 31, 1992
----------- ----------- ----------- --------------------
<S> <C> <C> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 358,681 $ 400,911 $ 256,740 $ 200
Ratio of net investment income to
average net assets..................... 12.8% 7.93% 8.0% N/A(a)
Ratio of expenses to average net
assets................................. 0.78% 0.72% 0.9% N/A(a)
Ratio of interest expense to average net
assets................................. N/A 0.22% N/A N/A
Portfolio turnover rate................. 213% 178% 195% none
</TABLE>
- ----------------
(a) Ratios are not meaningful due to short period of operation.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 95
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global High Income 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
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 on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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 TRANSLATIONS
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, sales of 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 year end, resulting from changes in exchange rates.
(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.
Statement of Additional Information Page 96
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
(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 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
amounts 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 hold 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 bond 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 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 bond market and to fluctuations in currency values or interest
rates.
Statement of Additional Information Page 97
<PAGE>
GLOBAL HIGH INCOME 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 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 an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan, and is maintained at this level during the period of the
loan. For the year ended October 31, 1995, the Portfolio received fees of $929
which were used to reduce the Fund's custodian fees. At October 31, 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) 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.
(M) 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 0.475% on the first $500 million of average daily net
assets of the Portfolio; 0.45% on the next $1 billion; 0.425% on the next $1
billion; and 0.40% on amounts thereafter, plus 2% of the Portfolio's total
investment income calculated in accordance with generally accepted accounting
principles, adjusted daily for currency revaluations, on a mark to market basis,
of the Portfolio's assets; provided, however, that during any fiscal year this
amount shall not exceed 2% of the Portfolio's total investment income calculated
in accordance with generally accepted accounting principles. 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 or G.T. Services $500 per year plus $150
for each meeting of the board or any committee thereof attended by the Trustees.
At October 31, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global High Income Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $528,728,519 and $504,864,711, respectively.
Purchases and sales of U.S. government obligations by the Portfolio aggregated
$128,514,376 and $145,460,470, respectively.
Statement of Additional Information Page 98
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
4. WRITTEN OPTIONS:
The Portfolio's written options contract activity for the year ended October 31,
1995 was as follows:
COVERED CALL AND PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
------------- -----------
<S> <C> <C>
Options outstanding at October 31, 1994.................................... 0 $ 0
Options written............................................................ 12,500,000 111,000
Options cancelled in closing purchase transactions......................... 0 0
Options expired prior to exercise.......................................... (12,500,000) (111,000)
Options exercised.......................................................... 0 0
------------- -----------
Options outstanding at October 31, 1995.................................... 0 $ 0
------------- -----------
------------- -----------
</TABLE>
Statement of Additional Information Page 99
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 100
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 101
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 102
<PAGE>
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS GROWTH FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of U.S. companies believed to be undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL STRATEGIC INCOME FUND, GT GLOBAL
HIGH INCOME FUND, GLOBAL HIGH INCOME PORTFOLIO, LGT ASSET MANAGEMENT OR GT
GLOBAL, INC. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION.
INCSX602 MC
<PAGE>
GT GLOBAL GROWTH &
INCOME FUND: ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
GT Global Growth & Income Fund ("Fund") is a non-diversified mutual fund
organized as a separate series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end management investment company. This Statement of Additional
Information relating to the Advisor Class shares of the Fund, which is not a
prospectus, supplements and should be read in conjunction with the Fund's
current Advisor Class Prospectus dated February 29, 1996, a copy of which is
available without charge by writing to the above address or by calling the Fund
at the toll-free telephone number listed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 16
Execution of Portfolio Transactions...................................................................................... 17
Directors and Executive Officers......................................................................................... 20
Management............................................................................................................... 22
Valuation of Fund Shares................................................................................................. 23
Information Relating to Sales and Redemptions............................................................................ 24
Taxes.................................................................................................................... 26
Additional Information................................................................................................... 28
Investment Results....................................................................................................... 29
Description of Debt Ratings.............................................................................................. 36
Financial Statements..................................................................................................... 38
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation together
with current income. The Fund seeks its objective by investing in a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets.
SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by LGT Asset Management to be located in that country may have
substantial off-shore 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 the Fund's ability to invest. For example, 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. LGT Asset Management is not aware at this
time of the existence of any investment or exchange control regulations which
might substantially impair the operations of the Fund as described in the
Prospectus and this Statement of Additional Information. Although restrictions
may in the future make it undesirable to invest in certain countries, LGT Asset
Management does not believe that any current repatriation restrictions would
affect its decisions to invest in the countries eligible for investment by the
Fund. The Fund has no present intention of making any significant investment in
any country or stock market LGT Asset Management considers the political or
economic situation to be at risk of substantial or total loss because of such
political or economic situation.
The Fund may invest in the securities of investment companies within the limits
of the Investment Company Act of 1940, as amended ("1940 Act"). These
limitations currently provide that, in general, the Fund may purchase shares of
a closed-end investment company unless (a) such a purchase would cause the Fund
to own in the aggregate more than 3 percent of the total outstanding voting
stock of the investment company or (b) such a purchase would cause the Fund to
have more than 5 percent of its total assets invested in the investment company
or more than 10 percent of its total assets invested in an aggregate of all such
investment companies. Investment in such investment companies may also involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such investment companies
unless, in the judgment of LGT Asset Management, 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
The Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible issuers. These securities may not necessarily be denominated in the
same currency as the securities for which they may be exchanged. ADRs and ADSs
typically are issued by an American bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depository Receipts ("CDRs"), are issued in
Europe typically by foreign banks and trust companies and evidence ownership of
either foreign or domestic securities. Generally, ADRs and ADSs in registered
form are designed for use in United States securities markets and EDRs in bearer
form are designed for use in European securities markets. For purposes of the
Fund's investment policies, the Fund'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.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed
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GT GLOBAL GROWTH & INCOME FUND
5% of the value of its net assets and not more than 2% of such assets will be
invested in warrants and rights which are not listed on the American or New York
Stock Exchange. Warrants or rights acquired by the Fund in units or attached to
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by the
Company's Board of Directors without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. 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 be made only to
firms deemed by LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, the Fund intends to enter into repurchase
agreements only with banks and dealers believed by LGT Asset Management to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. LGT Asset Management will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300%
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GT GLOBAL GROWTH & INCOME FUND
asset coverage, even though from an investment standpoint such sales might be
disadvantageous. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. Any borrowing by
the Fund may cause greater fluctuation in the value of its shares than would be
the case if the Fund did not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by a vote of
a majority of the Company's Board of Directors. In the event that the Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association certificates or other securities together with a commitment
(for which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain, in a segregated account
with a custodian, cash, U.S. government securities or other liquid, high grade
debt securities in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility. The Fund may
only make short sales "against the box." In this type of short sale, at the time
of the sale the Fund owns the security it has sold short or has the immediate
and unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Fund will
deposit in a separate account with its custodian an equal amount of the
securities sold short or securities convertible into or exchangeable for such
securities at no cost. The Fund could close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund might want to
continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
The Fund might make a short sale "against the box" in order to hedge against
market risks when LGT Asset Management believes that the price of a security may
decline, causing a decline in the value of a security owned by the Fund or a
security convertible into or exchangeable for such security, or when LGT Asset
Management wants to sell the security the Fund owns at a current attractive
price, but also wishes to defer recognition of gain or loss for federal income
tax purposes and for purposes of satisfying certain tests applicable to
regulated investment companies under the Internal Revenue Code of 1986, as
amended ("Code"). In such case, any future losses in the Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses in the long position are reduced will depend upon the
amount of the securities sold short relative to the amount of the securities the
Fund owns, either directly or indirectly, and, in the case where the Fund owns
convertible securities, changes in the investment values or conversion premiums
of such securities. There will be certain additional transaction costs
associated with short sales "against the box," but the Fund will endeavor to
offset these costs with income from the investment of the cash proceeds of short
sales.
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GT GLOBAL GROWTH & INCOME FUND
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 LGT Asset
Management'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 LGT Asset Management is
experienced in the use of these instruments, there can be no assurance that
any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because LGT Asset Management projected a decline in the price of
a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of LGT Asset Management are not expected to make any major price moves
in the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the
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GT GLOBAL GROWTH & INCOME FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time 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.
The Fund generally would write put options in circumstances where LGT Asset
Management wishes to purchase the underlying security or currency for the Fund's
portfolio at a price lower than the current market price of the security or
currency. In such event, the Fund would write a put option at an exercise price
that, reduced by the premium received on the option, reflects the lower price it
is willing to pay. Since the Fund also would receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
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GT GLOBAL GROWTH & INCOME FUND
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund has the right to sell the underlying security
or currency at the exercise price any any time until (American style) or
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when LGT
Asset Management 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL GROWTH & INCOME FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC
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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the extent of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such calls as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL GROWTH & INCOME FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund as the call writer will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock price levels in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Fund. The Fund'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 or 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.
The Fund only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
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GT GLOBAL GROWTH & INCOME FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded, and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL GROWTH & INCOME FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a futures contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds 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, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with the
guidelines approved by the Company's Board of Directors.
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GT GLOBAL GROWTH & INCOME FUND
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
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 the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, the Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the values of which LGT Asset Management believes will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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GT GLOBAL GROWTH & INCOME FUND
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Fund has purchased) expose the Fund to an obligation to another
party. A Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. government securities or other
liquid, high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Fund
invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
illiquid securities. See "Investment Limitations." Securities may be considered
illiquid if the Fund cannot reasonably expect within seven days to sell the
securities for approximately the amount at which the Fund values such
securities. The sale of illiquid securities, if they can be sold at all,
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than the sale of liquid securities,
such as securities eligible for trading on U.S. securities exchanges or in the
over-the-counter markets. Moreover, restricted securities which may be illiquid
for purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
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GT GLOBAL GROWTH & INCOME FUND
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to LGT Asset Management in accordance
with procedures approved by the Company's Board of Directors. LGT Asset
Management takes into account a number of factors in reaching liquidity
decisions, including, but not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security; (iii) the
number of dealers who have undertaken to make a market in the security; (iv) the
number of other potential purchasers; and (v) the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited and the mechanics of transfer). LGT Asset Management monitors the
liquidity of securities in the Fund's portfolio and periodically reports on such
decisions to the Board of Directors.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, LGT Asset Management 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.
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CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U. S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the U.S.,
and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., 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 Fund are uninvested and no return
is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive
opportunities. Inability to dispose of a portfolio security due to settlement
problems either could result in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. LGT
Asset Management will consider such difficulties when determining the allocation
of the Fund's assets, although LGT Asset Management does not believe that such
difficulties will have a material adverse effect on the Fund's portfolio trading
activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Funds' investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EUROPE. The countries that are members of
the European Economic Community ("Common Market") (Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and
the United Kingdom) eliminated certain import tariffs and quotas and other trade
barriers with respect to one another over the past several years. LGT Asset
Management 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 the Fund.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by the Fund in Japan means that the Fund 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.
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information and subject to operating policy (4) below;
(4) Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase over-the-counter options or hold assets set aside to cover
over-the-counter options written by the Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of
the Fund's net assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to operating policy (4) below;
(8) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets at the
lower of cost or fair market value. The Fund will not purchase securities
while borrowings in excess of 5% of its total assets are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage;
(9) 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;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs; or
(11) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Fund, its 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.
For purposes of the concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not: (1) invest in securities of an issuer if
the investment would cause the Fund to own more than 10% of any class of
securities of any one issuer; (2) sell securities short, except to the extent
that the Fund contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short; (3) invest more than
5% of its total assets in securities of companies having, together with their
predecessors, a record of less than three years of continuous operation; or (4)
enter into a futures contract, an option on a futures contract, or an option on
foreign currency traded on a CFTC-regulated exchange, in each case other than
for BONA FIDE hedging purposes (as defined by the CFTC), if the aggregate
initial margin and premiums required to establish all of those positions
(excluding the amount by which options are "in-the-money") exceeds 5% of the
liquidation value of the Fund's portfolio, after taking into account unrealized
profits and unrealized losses on any contracts the Fund has entered into.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Fund's portfolio transactions
and the selection of broker/dealers who execute such transactions on behalf of
the Fund. In executing portfolio transactions, LGT Asset Management seeks the
best net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
Although LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
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 the interests of the Fund, LGT Asset Management may select
brokers to execute the Fund's portfolio transactions, on the basis of the
research and brokerage services they provide to LGT Asset Management for its use
in
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
managing the Fund and its other advisory accounts. Such services may include
furnishing analyses, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such brokers are in addition to,
and not in lieu of, the services required to be performed by LGT Asset
Management under the Management Contract (defined below). A commission paid to
such brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that LGT Asset Management
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of LGT Asset
Management to the Fund and its other clients and that the total commissions paid
by the Fund will be reasonable in relation to the benefits received by the Fund
over the long term. Research services may also be received from dealers who
execute Fund transactions in over-the-counter markets.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Fund toward payment of the Fund's expenses, such
as transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
LGT Asset Management are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases, LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, LGT Asset Management may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which LGT
Asset Management serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and brokers
than in the United States. Foreign security settlements may in some instances be
subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest generally are traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to such affiliates are reasonable and
fair in the context of the market in which they are operating. Any such
transactions will be effected and related compensation paid only in accordance
with applicable SEC regulations.
For the fiscal years ended October 31, 1995, 1994, and 1993, the Fund paid
aggregate brokerage commissions of $318,958, $280,861, and $382,594,
respectively. For the fiscal year ended October 31, 1994, the Fund paid Bank-in-
Liechtenstein, Frankfurt, as "affiliated broker" as defined in the 1940 Act,
aggregate brokerage commissions of $2,485 for transactions involving purchases
and sales of portfolio securities, which represented 0.89% of the total
brokerage commissions paid by the Fund and 0.35% of the aggregate dollar amount
of transactions involving payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when LGT Asset Management has concluded
that the sale of a security owned by the Fund and/or the purchase of another
security of better value can enhance principal and/or increase income. A
security may be sold to avoid any prospective decline in market value, or a
security may be purchased in anticipation of a market rise. Consistent with the
Fund's investment objective, a security also may be sold and a comparable
security purchased
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
coincidentally in order to take advantage of what is believed to be a disparity
in the normal yield and price relationship between the two securities. Although
the Fund does not intend generally to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever management believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. However the portfolio turnover rate will not be a
limiting factor when LGT Asset Management deems portfolio changes appropriate.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that the Fund will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to the
Fund's shareholders. For the fiscal years ended October 31, 1995, and 1994, the
Fund's portfolio turnover rates were 83%, and 117%, respectively.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust since 1995; Director and President of LGT Asset Management Holdings, Inc. ("LGT
50 California St. Asset Management Holdings") since 1988; Director and President of LGT Asset Management
San Francisco, CA 94111 since 1989; Director of GT Global since 1987; President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and President of G.T.
Insurance from 1992 to 1995. Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Ms. 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989, Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international GT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995 Senior Vice President -- Finance
Vice President and Chief and Administration of GT Global, GT Services and G.T. Insurance. Senior Vice President --
Financial Officer Finance and Administration of LGT Asset Management Holdings and LGT Asset Management since
50 California Street 1994. From 1990 to 1994, Mr. Tufts was Vice President -- Finance of LGT Asset Management
San Francisco, CA 94111 Holdings, LGT Asset Management, GT Global and GT Services. He was Vice President --
Finance of G.T. Insurance from 1992 to 1994; and a Director of LGT Asset Management, GT
Global and GT Services since 1991.
</TABLE>
- ------------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the GT companies.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Kenneth W. Chancey, 50 Vice President -- Mutual Fund Accounting of LGT Asset Management since 1992. Mr. Chancey
Vice President and was Vice President of Putnam Fiduciary Trust Company from 1989 to 1992.
Chief Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management Holdings, LGT Asset
Vice President and Secretary Management, GT Global, GT Services and G.T. Insurance since February, 1996. Mr. Lee was
50 California Street the Senior Vice President, General Counsel and Secretary of Strong/Corneliuson Management,
San Francisco, CA 94111 Inc. and Secretary of each of the Strong Funds 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 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT Global, GT Services
Assistant Secretary and G.T. Insurance since February 1996. Assistant General Counsel of G.T. Insurance since
50 California Street 1992 and Assistant General Counsel LGT Asset Management, GT Global and GT Services since
San Francisco, CA 94111 1991. From 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management, GT Global, GT
Assistant Secretary Services and G.T. Insurance since February 1996. Assistant General Counsel of LGT Asset
50 California Street Management since January 1995. From 1993 to 1994, Mr. Thelander was an associate at
San Francisco, CA 94111 Kirkpatrick & Lockhart LLP (a law firm). Prior thereto, he was an attorney with the U.S.
Securities and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc. and G.T. Global Developing
Markets Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a
Trustee of G.T. Greater Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio and Global
Investment Portfolio, which are also registered investment companies managed by
LGT Asset Management. Each Director and Officer serves in total as a Director or
Trustee and Officer, respectively, of 10 registered investment companies with 40
series managed or administered by LGT Asset Management. The Company pays each
Director, who is not a director, officer or employee of LGT Asset Management or
any affiliated company, $5,000 per annum, plus $300 per Fund for each meeting of
the Board attended, and reimburses travel and other expenses incurred in
connection with attendance at such meetings. Other Directors and officers
receive no compensation or expense reimbursement from the Company. For the
fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Ms. Quigley, who are not directors, officers or employees of LGT Asset
Management or other affiliated company, received total compensation of
36,705.30, 34,230.22, 36,755.58 and 33,706.85, respectively, from the Company
for which he or she serves as a Director. For the fiscal year ended October 31,
1995 Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $92,176.78, $87,868.64, $92,280.90 and $86,957.55, respectively,
from the 40 GT Global Mutual Funds for which he or she serves as a Director or
Trustee. Fees and expenses disbursed to the Directors contained no accrued or
payable pension or retirement benefits. As of the date of this Statement of
Additional Information, the officers and Directors and their families as a group
owned in the aggregate beneficially or of record less than 1% of the outstanding
shares of the Fund or of all the Company's funds in the aggregate.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
LGT Asset Management serves as the Fund's investment manager and administrator
under an Investment Management and Administration Contract ("Management
Contract") between the Company and LGT Asset Management. As investment manager
and administrator, LGT Asset Management makes all investment decisions for the
Fund and administers the Fund's affairs. Among other things, LGT Asset
Management furnishes the services and pays the compensation and travel expenses
of persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company and the Fund, and provides suitable office space,
necessary small office equipment and utilities. For these services, the Fund
pays LGT Asset Management investment management and administration fees, based
on the Fund's average daily net assets, computed daily and paid monthly, at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million, and .90% on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund, the Company or LGT
Asset Management may terminate the Contract without penalty upon sixty days'
written notice. The Management Contract terminates automatically in the event of
its assignment (as defined in the 1940 Act).
Under the Management Contract, LGT Asset Management has agreed to waive its
investment management and administration fees from the Fund and to reimburse the
Fund to the extent necessary to assure that the Fund's annual expenses
(exclusive of brokerage commissions, organizational expenses, taxes, interest,
distribution-related expenses, certain expenses attributable to investing
outside the U.S. and extraordinary expenses) do not exceed the most stringent
expense limitations prescribed by any state in which the Fund's shares are
offered for sale. Currently, the most restrictive applicable limitation provides
that the Fund's expenses may not exceed an annual rate of 2 1/2% of the first
$30 million of average net assets, 2% of the next $70 million of average net
assets and 1 1/2% of assets in excess of that amount. In addition, LGT Asset
Management and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the maximum annual level of 1.50% of the average daily net assets
of the Fund's Advisor Class shares, during each fiscal year and LGT Asset
Management and GT Global have agreed to reimburse the Fund if the Fund's
expenses exceed that amount.
The following table discloses the amount of investment management and
administration fees paid by the Fund to LGT Asset Management during the Fund's
last three fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- --------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1995..................................................................................................... $ 6,301,399
1994..................................................................................................... $ 5,676,421
1993..................................................................................................... $ 2,226,185
</TABLE>
The fees shown in the table above do not include the effect of reimbursements of
Fund operating expenses made by LGT Asset Management. During the Fund's fiscal
year ended October 31, 1993, LGT Asset Management reimbursed the Fund for a
portion of the Fund's aggregate operating expenses in the amount of $183,449.
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are offered continuously through the Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
transactions other than exchanges and a per exchange fee of $2.25. The Transfer
Agent also is reimbursed by the Fund for its out-of-pocket expenses for such
items as postage, forms, telephone charges, stationery and office supplies.
LGT Asset Management serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of all
registered mutual funds advised by LGT Asset Management ("GT Global Mutual
Funds") and 0.02% to the assets in excess of $5 billion, and allocating the
result according to each Fund's average daily net assets.
As of October 31, 1995, the Fund paid LGT Asset Management fees of $40,735 for
such accounting services.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by LGT Asset Management, GT Global and
other agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized as series of the Company are allocated on a basis deemed
fair and equitable, which may be based on the relative net assets of the Fund or
the nature of the services performed and relative applicability to the Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the 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
each business day the NYSE is open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange 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 LGT Asset
Management to be the primary market.
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
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term investments are
amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing market
rate as determined by LGT Asset Management on that day. When market quotations
for futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or at the mean of the
current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available, or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Fund's net asset value may not take place contemporaneously with the
determination of the prices of securities held by the Fund. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Fund's net asset value unless LGT Asset Management, under the supervision of
the Company's Board of Directors, determines that the particular event would
materially affect net asset value. As a result, the Fund's net asset value may
be significantly affected by such trading on days when a shareholder cannot
purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment for Fund shares, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, 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 cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT 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 GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution, if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which would prohibit the Fund from
disposing of its portfolio securities or in fairly determining the value of its
assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to qualify or to continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"), the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. These requirements include the following: (1)
the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, Futures or Forward Contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of securities, or any of the
following, that were held for less than three months -- options or Futures
(other than those on foreign currencies), or foreign currencies (or options,
Futures or Forward Contracts thereon) that are not directly related to the
Fund's principal business of investing in securities (or options and Futures
with respect to securities) ("Short-Short Limitation"); (3) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
represents income from foreign sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from disposition of, stock of a PFIC (collectively "PFIC income"), plus
interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income would be included
in the Fund's investment company taxable income and, accordingly, would not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from foreign currencies (except certain gains that
may be excluded by future regulations), and gains from the disposition of
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, futures and Forward
Contracts on foreign currencies ("Section 988" gains or loss). Each Section 988
gain or loss generally is computed separately and treated as ordinary income or
loss. In the case of overlap between Sections 1256 and 988, special provisions
determine the character and timing of any income, gain or loss. The Fund
attempts to monitor Section 988 transactions to minimize any adverse tax impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly GT Management PLC in London, England; LGT Asset
Management Ltd., formerly GT Management (Asia) Ltd. in Hong Kong; LGT Investment
Trust Management Ltd., formerly GT Management (Japan) in Tokyo; LGT Asset
Management Pte. Ltd., formerly GT Management (Singapore) PTE Ltd. located in
Singapore; LGT Asset Management Ltd., formerly GT Management (Australia) Ltd.,
located in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management
GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Fund's 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 Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company and/or the Fund at any time, or to grant the use of
such names to any other company.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return," as referred to in the Prospectus (see "Other
Information -- Performance Information in the Prospectus"), is calculated
separately for Class A, Class B and Advisor Class shares of the Fund, as
follows: Standardized Return ("T") is computed by using the value at the end of
the period ("EV") of a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the SEC:
P(1+T) to the (n)th power = EV. The following assumptions will be reflected in
computations made in accordance with this formula: (1) for Class A shares
deduction of the maximum sales charge of 4.75% from the $1,000 initial
investment; (2) for Class B shares, deduction of the applicable contingent
deferred sales charge imposed on a redemption of Class B shares held for the
period; (3) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Board and (4) a complete redemption
at the end of any period illustrated.
The Fund's Standardized Returns for its Class A shares, stated as average
annualized total returns, for the periods shown were as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1995......................................................................... 1.22%
October 31, 1990 to October 31, 1995................................................................ 9.85%
September 25, 1990 (commencement of operations) to October 31, 1995................................. 9.69%
</TABLE>
The Fund's Standardized Returns for its Class B shares, which were first offered
on October 22, 1992, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- -------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1995....................................................................... 0.57%
October 22, 1992 (commencement of operations) to October 31, 1995................................. 9.69%
</TABLE>
The Fund's Standardized Returns for its Advisor Class shares, stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995....................................... 3.83%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Fund may quote non-standardized total returns that do not reflect the effect of
sales charges. Non-Standardized Returns may be quoted from the same or different
time periods for which Standardized Returns are quoted.
The Fund's Non-Standardized Returns for its Class A shares, stated as aggregate
total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- ------------------------------------------------------------------------------------------------ -----------------------
<S> <C>
Year ended October 31, 1995..................................................................... 6.27%
September 25, 1990 (commencement of operations) to October 31, 1995............................. 68.31%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as aggregate total returns, for the periods
shown, were as follows:
<TABLE>
<CAPTION>
PERIOD AGGREGATE TOTAL RETURN
- ------------------------------------------------------------------------------------------------ -----------------------
<S> <C>
Year ended October 31, 1995..................................................................... 0.57%
October 22, 1992 (commencment of operations) to October 31, 1995................................ 32.27%
</TABLE>
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
The Fund's Non-Standardized Returns for its Advisor Class shares, stated as
aggregate total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- -------------------------------------------------------------------------------------------------- -----------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995..................................... 3.83%
</TABLE>
The Fund's Non-Standardized Returns for its Class A shares, stated as average
annualized total returns for the periods shown, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- --------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1995........................................................................ 6.27%
October 31, 1990 to October 31, 1995............................................................... 10.93%
September 25, 1990 (commencement of operations) to October 31, 1995................................ 10.75%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares which were first
offered on October 22, 1992, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
PERIOD NON-STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------- -------------------------
<S> <C>
Year ended October 31, 1995................................................................... 5.57%
October 22, 1992 (commencement of operations) to October 31, 1995............................. 10.23%
</TABLE>
The Fund's Non-Standardized Returns for its Advisor Class shares, stated as
average annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995........................................ 3.83%
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information 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 LGT Asset Management. The authors and
publishers of such material are not to be considered as "experts" under the
Securities Act of 1933 on account of the inclusion of such information herein.
Stocks chosen by Morgan Stanley Capital International or the IFC for inclusion
in its various international market indices may not necessarily constitute a
representative cross section of the particular markets.
GT Global believes that 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 such indices. 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. LGT Asset Management, 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 indices.
In addition, GT Global may in its radio, television and other advertising,
employ the use of sound effects such as, for example, sounds of electronic data
being communicated.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets.
(2) The Lehman Brothers 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, or, in the case of nonrated bonds, BBB by
Fitch Investors Service (excluding Collateralized Mortgage Obligations).
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger") and/or other companies that
rank or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/or other factors. In this
regard, the Fund may be compared to the Fund's "peer group" as defined by
Lipper, CDA/Wiesenberger and/or other firms, as applicable, or to specific
funds or groups of funds within or without such peer group. Morningstar is a
mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 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.
(9) 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.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(13) 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.
(14) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(15) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(16) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(17) International Financial Statistics, which is produced by the
International Monetary Fund.
(18) Various publications and reports produced by the World Bank and its
affiliates.
(19) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(20) Various publications including but not limited to ratings agencies
such as Moody's Investors Service, Fitch Investors Service, Standard &
Poor's.
(21) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(22) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(23) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(24) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, The Bank for International Settlements,
Asian Development Bank, Bloomberg, L.P. and Ibbottson Associates may be used as
well as information reported by the Federal Reserve and the respective Central
Banks of various nations. In addition, performance rankings, ratings and
commentary reported periodically in national financial publications, included
but not limited to, Money Magazine, Smart Money, Global Finance, EuroMoney,
Financial World, Forbes, Fortune, Business Week, Latin Finance, the Wall Street
Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal Finance,
Barron's, The Financial Times, USA Today, The New York Times, Far Eastern
Economic Review, The Economist and Investors Business Digest. Each Fund may
compare its performance to that of other compilations or indices of comparable
quality to those listed above and other indices which may be developed and made
available.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including, but
not limited to home appliances, automobiles and clothing, purchased by Americans
are manufactured abroad. GT Global believes that investing globally in the
companies that produce products for U.S. consumers can help U.S. investors seek
protection of the value of their assets against the potentially increasing costs
of foreign manufactured goods. Of course, there can be no assurance that there
will be any correlation between global investing and the costs of such foreign
goods unless there is a corresponding change in value of the U.S. dollar to
foreign currencies. From time to time, GT Global may refer to or advertise the
names of such companies although there can be no assurance that any GT Global
Mutual Fund may own the securities of these companies.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT 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.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R(2) in advertising. In addition, the Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare the Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT 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
Fund may also discuss these plans which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 each
year to an IRA (or if less, 100% of compensation). If your spouse is not
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified employee pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit-sharing plan, additionally permit the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and GT Global will quote certain information
including, but not limited to, data regarding: individual countries, regions,
world stock exchanges, and economic and demographic statistics from sources GT
Global deems reliable, including, but not limited to, the economic and financial
data of such financial organizations 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 Industry
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc. and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management, Inc.
18) Political and economic structure of countries: Economist Intelligence Unit.
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of LGT Asset Management provide any
assurance that the GT Global Mutual Funds' investment objectives will be
achieved.
THE LGT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the LGT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee which sets broad guidelines for asset
allocation and currency management based on LGT Asset Management'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 35
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the 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 edge." Interest
payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
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 other 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 pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STANDARD & POOR'S RATINGS SERVICES ("S&P") rates the securities debt of
various entities in categories ranging from "AAA" to "DD" 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 -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
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 indefinable 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 which 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.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest 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. The "D" rating also will be used upon 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.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
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 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity normally will be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This normally will
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios,
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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.
S&P ratings of commercial paper are graded into four categories ranging from
"A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (++) sign designation. A-2 --
Capacity for timely payments on issues with this designation is strong; however,
the relative degree of safety is not as high as for issues designated "A-1."
COMMERCIAL PAPER RATINGS
The Fund may invest only in high quality commercial paper, i.e. commercial paper
rated Prime-1 by Moody's, A-1 by S&P, or, if unrated, judged by LGT Asset
Management to be of comparable quality. Issuers rated Prime-1 by Moody's have,
in Moody's judgment, a superior capacity 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 protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues assigned the A-1 rating by S&P
are regarded by S&P as having the greatest capacity for timely payment. This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1995, and for its
fiscal year then-ended appear on the following pages.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Growth & Income Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Growth & Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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, 1995 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 Growth & Income Fund as of October 31, 1995, 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 15, 1995
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (24.5%)
Swiss Bank Corp. - Bearer .............................. SWTZ 34,795 $ 14,287,135 2.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer .................... SWTZ 10,652 11,544,594 1.8
BANKS-MONEY CENTER
National Australia Bank Ltd. ........................... AUSL 1,309,437 11,207,792 1.7
BANKS-MONEY CENTER
CS Holding AG - Registered ............................ SWTZ 98,500 10,067,847 1.6
BANKS-MONEY CENTER
AEGON N.V. ............................................. NETH 189,852 7,206,676 1.1
INSURANCE-LIFE
First Tennessee National Corp. ......................... US 122,700 6,564,450 1.0
BANKS-REGIONAL
Internationale Nederlanden Groep N.V. ................. NETH 105,705 6,303,448 1.0
OTHER FINANCIAL
Mercury Asset Management Group PLC ..................... UK 397,698 5,804,870 0.9
INVESTMENT MANAGEMENT
American General Corp. ................................. US 170,000 5,588,750 0.9
INSURANCE-LIFE
Deutsche Bank AG ....................................... GER 112,500 5,089,800 0.8
BANKS-MONEY CENTER
ABN AMRO Holding N.V. .................................. NETH 115,974 4,872,672 0.8
BANKS-REGIONAL
MAI PLC: .............................................. UK -- -- 0.7
OTHER FINANCIAL
Convertible Preferred, 5.9% till 12/31/49 ............ -- 1,463,200 2,798,280 --
Common ............................................... -- 374,000 1,932,954 --
National Westminster Bank PLC ......................... UK 471,800 4,705,323 0.7
BANKS-MONEY CENTER
IKB Deutsche Industriebank AG ......................... GER 23,600 4,418,816 0.7
BANKS-REGIONAL
Generale de Banque S.A. ................................ BEL 13,420 4,343,402 0.7
BANKS-MONEY CENTER
Lloyds Abbey Life PLC ................................. UK 599,000 4,336,052 0.7
INSURANCE-LIFE
General Accident PLC ................................... UK 400,000 4,071,440 0.6
INSURANCE - PROPERTY-CASUALTY
Sun Hung Kai Properties Ltd. ........................... HK 494,500 3,949,629 0.6
REAL ESTATE
Dresdner Bank AG ....................................... GER 132,350 3,536,105 0.6
BANKS-MONEY CENTER
Commercial Union PLC ................................... UK 361,550 3,514,355 0.6
INSURANCE - MULTI-LINE
Fortis Amev N.V. ....................................... NETH 54,017 3,392,322 0.5
OTHER FINANCIAL
Kredietbank N.V. ....................................... BEL 12,980 3,258,465 0.5
BANKS-REGIONAL
M & G Group PLC ........................................ UK 155,000 3,197,013 0.5
INVESTMENT MANAGEMENT
Sparebanken NOR (Union Bank of Norway) ................. NOR 112,000 2,968,293 0.5
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Gerrard & National Holdings PLC ........................ UK 375,880 $ 2,631,813 0.4
SECURITIES BROKER
Henderson Investment Ltd. .............................. HK 2,691,000 2,192,842 0.3
REAL ESTATE
Banco de Santander S.A. ............................... SPN 48,750 2,127,389 0.3
BANKS-MONEY CENTER
Bank of Montreal ...................................... CAN 88,000 1,954,752 0.3
BANKS-REGIONAL
Hopewell Holdings ..................................... HK 2,631,000 1,659,008 0.3
REAL ESTATE
Amoy Properties Ltd. .................................. HK 1,581,500 1,523,978 0.2
REAL ESTATE
Societe Generale Paris ................................. FR 12,280 1,404,218 0.2
BANKS-MONEY CENTER
Banco Popular Espanol S.A. ............................. SPN 7,880 1,253,328 0.2
BANKS-MONEY CENTER
UAP Compagnie .......................................... FR 42,367 1,100,667 0.2
INSURANCE - MULTI-LINE
Compagnie Financiere de Paribas S.A. ................... FR 18,332 1,008,757 0.2
OTHER FINANCIAL
Realty Development Corp., Ltd. "A" .................... HK 280,000 800,393 0.1
REAL ESTATE
Commerzbank AG ......................................... GER 2,250 520,891 0.1
BANKS-MONEY CENTER
------------
157,138,519
------------
Energy (11.4%)
Elektrowatt AG ......................................... SWTZ 45,508 13,753,850 2.1
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. .............................. NETH 80,550 9,999,838 1.6
OIL
Electrabel S.A. ........................................ BEL 34,760 7,812,586 1.2
ELECTRICAL & GAS UTILITIES
Exxon Corp. ............................................ US 91,300 6,973,038 1.1
OIL
Pacific Gas and Electric Co. ........................... US 220,000 6,462,500 1.0
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................ US 63,800 6,427,850 1.0
OIL
Reunies Electrobel & Tractebel S.A. .................... BEL 11,587 4,246,964 0.7
ELECTRICAL & GAS UTILITIES
Groupe Bruxelles Lambert S.A. .......................... BEL 31,025 4,001,496 0.6
OIL
Shell Transport & Trading Co., PLC ..................... UK 324,700 3,792,529 0.6
OIL
Elf Aquitaine .......................................... FR 52,475 3,574,547 0.6
OIL
British Gas PLC ........................................ UK 859,500 3,273,898 0.5
GAS PRODUCTION & DISTRIBUTION
Iberdrola S.A. ........................................ SPN 134,000 1,011,238 0.2
ELECTRICAL & GAS UTILITIES
Union Electrica Fenosa S.A. ............................ SPN 206,000 959,790 0.2
ELECTRICAL & GAS UTILITIES
Groupe Bruxelles Lambert S.A. - VVPR ................... BEL 742 95,701 --
OIL
------------
72,385,825
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industries (8.1%)
Broken Hill Proprietary Co., Ltd. ...................... AUSL 939,403 $ 12,718,996 2.0
MISC. MATERIALS & COMPONENTS
Amcor Ltd. ............................................. AUSL 1,121,546 8,403,908 1.3
PAPER/PACKAGING
Monsanto Co. ........................................... US 65,800 6,892,550 1.1
CHEMICALS
Solvay S.A. "A" ........................................ BEL 11,754 5,933,900 0.9
CHEMICALS
Akzo Nobel N.V. ........................................ NETH 51,450 5,859,040 0.9
CHEMICALS
RWE AG ................................................. GER 13,462 4,792,483 0.8
MISC. MATERIALS & COMPONENTS
BASF AG ................................................ GER 18,080 3,969,815 0.6
CHEMICALS
CRA Ltd. ............................................... AUSL 132,200 2,037,563 0.3
METALS - NON-FERROUS
St Laurent Paperboard, Inc.-/- ......................... CAN 80,000 1,157,321 0.2
FOREST PRODUCTS
------------
51,765,576
------------
Services (6.0%)
Telecom Corporation of New Zealand Limited ............. NZ -- -- 1.5
TELEPHONE NETWORKS
Common ............................................... -- 2,082,600 8,640,297 --
ADR{\/} .............................................. -- 19,000 1,261,125 --
McGraw-Hill, Inc. ...................................... US 81,000 6,631,875 1.0
BROADCASTING & PUBLISHING
Dun & Bradstreet Corp. ................................. US 109,800 6,560,550 1.0
BROADCASTING & PUBLISHING
Granada PLC, Convertible Preferred, 7.5% till
4/30/03 .............................................. UK 1,040,000 3,887,466 0.6
LEISURE & TOURISM
THORN EMI PLC .......................................... UK 140,000 3,259,365 0.5
LEISURE & TOURISM
Royal PTT Nederland N.V. ............................... NETH 86,335 3,036,497 0.5
TELEPHONE NETWORKS
British Telecommunications PLC ......................... UK 359,000 2,133,460 0.3
TELEPHONE NETWORKS
Tele Danmark AS "B" .................................... DEN 39,394 2,055,226 0.3
TELEPHONE NETWORKS
Cathay Pacific Airways ................................. HK 1,393,000 2,054,041 0.3
TRANSPORTATION - AIRLINES
------------
39,519,902
------------
Consumer Non-Durables (4.4%)
Philip Morris Cos., Inc. ............................... US 85,000 7,182,500 1.1
FOOD
Avon Products, Inc. ................................... US 91,000 6,472,375 1.0
PERSONAL CARE/COSMETICS
Universal Corp. ........................................ US 280,500 5,890,500 0.9
TOBACCO
Fleming Cos., Inc. ..................................... US 206,700 4,676,588 0.7
FOOD
Brown-Forman Corp. "B" ................................. US 84,300 3,213,938 0.5
BEVERAGES - ALCOHOLIC
Dairy Farm International Holdings Ltd.{\/} ............. HK 1,390,000 1,139,800 0.2
FOOD
------------
28,575,701
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (3.7%)
General Electric PLC .................................. UK 1,473,000 $ 7,310,289 1.1
AEROSPACE/DEFENSE
BICC PLC ............................................... UK 1,221,500 5,058,211 0.8
INDUSTRIAL COMPONENTS
Lockheed Martin Corp. .................................. US 69,545 4,737,753 0.7
AEROSPACE/DEFENSE
Siemens AG ............................................ GER 6,953 3,646,212 0.6
TELECOM EQUIPMENT
TransCanada Pipelines Ltd. ............................. CAN 145,000 1,935,246 0.3
MACHINERY & ENGINEERING
Thomson CSF S.A. ....................................... FR 62,560 1,304,053 0.2
AEROSPACE/DEFENSE
Trafalgar House PLC ................................... UK 131,000 47,621 --
MACHINERY & ENGINEERING
------------
24,039,385
------------
Health Care (2.8%)
Bristol Myers Squibb Co. .............................. US 138,700 10,575,875 1.7
PHARMACEUTICALS
Bayer AG ............................................... GER 25,860 6,879,829 1.1
PHARMACEUTICALS
------------
17,455,704
------------
Multi-Industry/Miscellaneous (2.0%)
VEBA AG ................................................ GER 170,200 6,989,169 1.1
CONGLOMERATE
Hutchison Whampoa ...................................... HK 565,000 3,113,230 0.5
CONGLOMERATE
Brascan Ltd. "A" ....................................... CAN 179,000 2,806,690 0.4
CONGLOMERATE
------------
12,909,089
------------
Consumer Durables (1.4%)
GKN PLC ............................................... UK 685,800 8,730,686 1.4
------------
AUTO PARTS
Technology (0.3%)
Alcatel Alsthom Compagnie Generale d'Electricite ....... FR 21,860 1,867,390 0.3
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $351,769,551) ............ 414,387,777 64.6
------------ -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (29.1%)
Canada (0.6%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 5,000,000 4,039,424 0.6
Denmark (1.1%)
Kingdom of Denmark, 8% due 3/15/06 ................... DKK 40,000,000 7,361,060 1.1
Germany (7.8%)
Deutschland Republic:
6.75% due 4/22/03 ................................. DEM 26,000,000 19,014,567 3.0
6.25% due 1/4/24 ................................... DEM 23,000,000 14,449,975 2.3
Bundesschatzanweisungen, 6.875% due 12/2/98 .......... DEM 14,635,000 10,984,829 1.7
Treuhandanstalt, 6.375% due 7/1/99 ................... DEM 7,000,000 5,181,980 0.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Italy (1.9%)
Italian Buoni Del Tesoro Poliennali (BTPS), 8.50% due
8/1/04 .............................................. ITL 23,000,000,000 $ 11,997,457 1.9
New Zealand (1.2%)
New Zealand Government, 8% due 4/15/04 ............... NZD 11,000,000 7,610,947 1.2
Spain (1.5%)
Kingdom of Spain, 8% due 5/30/04 ..................... ESP 1,350,000,000 9,399,393 1.5
Sweden (2.2%)
Swedish Government, 6% due 2/9/05 .................... SEK 117,600,000 14,292,473 2.2
United Kingdom (4.6%)
Conversion, 9.5% due 4/18/05 ........................ GBP 10,500,000 18,244,725 2.8
United Kingdom Treasury:
6% due 8/10/99 ..................................... GBP 3,865,000 5,852,937 0.9
8% due 12/7/15 ..................................... GBP 3,500,000 5,466,157 0.9
United States (8.2%)
United States Treasury Note:
7.25% due 5/15/04 ................................. USD 16,600,000 17,881,351 2.8
7.5% due 2/15/05 ................................... USD 8,050,000 8,849,969 1.4
6.5% due 8/15/05 ................................... USD 4,000,000 4,136,252 0.6
United States Treasury Bond:
6.875% due 8/15/25 ................................. USD 11,500,000 12,322,975 1.9
6.25% due 8/15/23 ................................. USD 10,000,000 9,762,500 1.5
------------
Total Government & Government Agency Obligations (cost
$177,666,101) ........................................... 186,848,971
------------
Corporate Bonds (5.1%)
Canada (0.2%)
St. Laurent Paperboard Inc., Convertible Bond, 8% due
6/15/04 ............................................. CAD 1,080,000 1,056,373 0.2
Germany (1.4%)
Deutsche Bank AG, 9% due 12/31/02+/+ ................. DEM 5,625,000 4,562,593 0.7
Commerzbank AG, Convertible Bond, 8.40% due
12/31/00+ ........................................... DEM 4,173,000 4,169,145 0.7
IKB Deutsche Industriebank, 6.45% due 3/31/06 ........ DEM 445,700 294,536 --
United Kingdom (2.5%)
Daily Mail & General Trust, Convertible Bond, 5.75%
due 9/26/03 ......................................... GBP 3,405,000 6,899,336 1.1
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 ............................................. GBP 3,485,000 5,990,102 0.9
Elf Enterprises Finance PLC, 8.75% due 6/27/06 ....... GBP 1,465,000 2,298,107 0.4
Trafalgar House PLC, Convertible Bond, 6% due
1/31/49 ............................................. GBP 1,236,000 908,393 0.1
United States (1.0%)
Siemens Capital Corp., 8% due 6/24/02+/+ ............. USD 4,710,000 6,405,600 1.0
------------
Total Corporate Bonds (cost $31,805,823) ................ 32,584,185
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $209,471,924) ....... 219,433,156 34.2
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
No. of Market % of Net
Warrants (0.0%) Country Warrants Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Henderson Investment Warrants, expire 3/31/96 (cost
$0)-/- ................................................ HK 269,100 $ 14,271 --
------------ -----
INVESTMENT MANAGEMENT
<CAPTION>
Market % of Net
Repurchase Agreement (0.1%) Value Assets {d}
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80% collateralized by $1,310,000 U.S. Treasury
Strips, due 2/15/02 (market value of collateral is
$906,610, including accrued interest) (cost $877,141)
...................................................... 877,141 0.1
------------ -----
TOTAL INVESTMENTS (cost $562,118,616) .................... 634,712,345 98.9
Other Assets and Liabilities ............................. 7,097,240 1.1
------------ -----
NET ASSETS ............................................... $641,809,585 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $641,809,585.
{\/} U.S. currency denominated.
-/- Non-income producing security.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $562,357,582 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 86,308,381
Unrealized depreciation: (13,953,618)
-------------
Net unrealized appreciation: $ 72,354,763
-------------
-------------
</TABLE>
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
<TABLE>
<S> <C> <C> <C> <C>
following countries:
<CAPTION>
<S> <C> <C> <C> <C>
Percentage of Net Assets {d}
-------------------------------------------
<CAPTION>
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.3 5.3
Belgium (BEL/BEF) ................... 4.6 4.6
Canada (CAN/CAD) ..................... 1.2 0.8 2.0
Denmark (DEN/DKK) .................... 0.3 1.1 1.4
France (FR/FRF) ...................... 1.7 1.7
Germany (GER/DEM) .................... 6.4 9.2 15.6
Hong Kong (HK/HKD) ................... 2.5 2.5
Italy (ITLY/ITL) ..................... 1.9 1.9
Netherlands (NETH/NLG) ............... 6.4 6.4
New Zealand (NZ/NZD) ................. 1.5 1.2 2.7
Norway (NOR/NOK) ..................... 0.5 0.5
Spain (SPN/ESP) ...................... 0.9 1.5 2.4
Sweden (SWDN/SEK) .................... 2.2 2.2
Switzerland (SWTZ/CHF) ............... 7.7 7.7
United Kingdom (UK/GBP) .............. 10.9 7.1 18.0
United States (US/USD) ............... 14.7 9.2 1.2 25.1
------ --- --- -----
Total ............................... 64.6 34.2 1.2 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $641,809,585.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Sell: (U.S. Dollars) Price Date (Depreciation)
- --------------------------------------------------------------------------- -------------- ----------- --------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks............................................................. 32,968,774 1.37500 01/24/96 $ 631,227
Dutch Guilders............................................................. 12,674,263 1.58183 11/15/95 (30,640)
Dutch Guilders............................................................. 697,084 1.64532 11/15/96 (28,522)
French Francs.............................................................. 1,462,617 4.81600 11/06/96 22,019
French Francs.............................................................. 3,947,691 4.90035 11/16/95 (9,463)
Swiss Francs............................................................... 15,511,679 1.21830 11/17/95 (1,065,319)
-------------- --------------
Total Contracts to Sell (Receivable amount $66,781,410)................ 67,262,108 (480,698)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 10.48%
Total Open Forward Foreign Currency Contracts.......................... $ (480,698)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $562,118,616)
(Note 1)................................................. $634,712,345
U.S. currency.............................. $2,148,396 --
Foreign currencies (cost $86,368).......... 86,113 2,234,509
----------
Interest and interest withholding tax reclaims
receivable............................................... 6,136,649
Dividends and dividend withholding tax reclaims
receivable............................................... 1,839,340
Receivable for Fund shares sold........................... 1,589,616
Miscellaneous receivable.................................. 57,542
Cash held as collateral for securities loaned (Note 1).... 66,191,073
------------
Total assets............................................ 712,761,074
------------
Liabilities:
Payable for Fund shares repurchased....................... 1,909,711
Payable for forward foreign currency contracts -- closed
(Note 1)................................................. 1,061,853
Payable for investment management and administration fees
(Note 2)................................................. 530,977
Payable for open forward foreign currency contracts, net
(Note 1)................................................. 480,698
Payable for service and distribution expenses (Note 2).... 382,987
Payable for printing and postage expenses................. 157,836
Payable for transfer agent fees (Note 2).................. 109,594
Payable for custodian fees (Note 1)....................... 36,195
Payable for professional fees............................. 33,921
Payable for registration and filing fees.................. 30,951
Payable for fund accounting fees (Note 2)................. 13,794
Distribution payable...................................... 5,449
Payable for Directors' fees and expenses (Note 2)......... 2,315
Other accrued expenses.................................... 4,135
Collateral for securities loaned (Note 1)................. 66,191,073
------------
Total liabilities....................................... 70,951,489
------------
Net assets.................................................. $641,809,585
------------
------------
Class A:
Net asset value and redemption price per share ($284,069,241
DIVIDED BY 44,716,651 shares outstanding).................. $ 6.35
------------
------------
Maximum offering price per share (100/95.25 of $6.35) *..... $ 6.67
------------
------------
Class B:+
Net asset value and offering price per share ($356,796,017
DIVIDED BY 56,149,732 shares outstanding).................. $ 6.35
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share ($944,327 DIVIDED BY 148,711 shares
outstanding)............................................... $ 6.35
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................. $585,988,405
Undistributed net investment income....................... 3,503,788
Accumulated net realized loss on investments and foreign
currency transactions.................................... (19,973,849)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies........................ (302,488)
Net unrealized appreciation of investments................ 72,593,729
------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $641,809,585
------------
------------
<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 47
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................. $ 20,124,306
Dividend income (net of foreign withholding tax of
$1,834,759)................................................ 15,986,542
------------
Total investment income................................... 36,110,848
------------
Expenses:
Investment management and administration fees (Note 2)...... 6,301,399
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,035,465
Class B.................................. 3,539,336 4,574,801
------------
Transfer agent fees (Note 2)................................ 1,373,300
Custodian fees (Note 1)..................................... 520,103
Printing and postage expenses............................... 413,672
Fund accounting fees (Note 2)............................... 165,947
Registration and filing fees................................ 118,965
Audit fees.................................................. 59,085
Legal fees.................................................. 39,930
Directors' fees and expenses (Note 2)....................... 17,950
Amortization of organization costs (Note 1)................. 17,648
Insurance expenses.......................................... 12,047
------------
Total expenses before reductions.......................... 13,614,847
------------
Expense reductions (Notes 1 & 5)........................ (232,599)
------------
Total net expenses........................................ 13,382,248
------------
Net investment income......................................... 22,728,600
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 13,795,663
Net realized loss on foreign currency
transactions.............................. (31,706,057)
------------
Net realized loss during the year......................... (17,910,394)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (583,752)
Net change in unrealized appreciation of
investments............................... 32,281,086
------------
Net unrealized appreciation during the year............... 31,697,334
------------
Net realized and unrealized gain on investments and foreign
currencies................................................... 13,786,940
------------
Net increase in net assets resulting from operations.......... $ 36,515,540
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 22,728,600 $ 17,564,361
Net realized gain (loss) on investments and
foreign currency transactions............. (17,910,394) 8,687,940
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (583,752) (1,672,868)
Net change in unrealized appreciation
(depreciation) of investments............. 32,281,086 (9,822,058)
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 36,515,540 14,757,375
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (10,790,288) (9,757,675)
From net realized gain on investments...... (506,546) (3,136,804)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (10,618,028) (7,806,686)
From net realized gain on investments...... (580,255) (2,807,047)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (18,236) --
----------------- -----------------
Total distributions...................... (22,513,353) (23,508,212)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 150,425,919 385,623,629
Decrease from capital shares repurchased... (199,707,569) (101,979,754)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (49,281,650) 283,643,875
----------------- -----------------
Total increase (decrease) in net assets...... (35,279,463) 274,893,038
Net assets:
Beginning of year.......................... 677,089,048 402,196,010
----------------- -----------------
End of year................................ $ 641,809,585 $ 677,089,048
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1995 1994 1993(D) 1992 1991
--------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
--------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income................. 0.24 0.22 0.24* 0.21* 0.27*
Net realized and unrealized gain
(loss) on investments................ 0.13 (0.03) 1.05 0.10 0.47
--------- ----------- ----------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.37 0.19 1.29 0.31 0.74
--------- ----------- ----------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.22) (0.21) (0.24) (0.14) (0.26)
From net realized gain on
investments.......................... (0.01) (0.06) -- (0.14) --
From sources other than net investment
income............................... -- -- (0.04) -- --
--------- ----------- ----------- ---------- ----------
Total distributions................. (0.23) (0.27) (0.28) (0.28) (0.26)
--------- ----------- ----------- ---------- ----------
Net asset value, end of period.......... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25
--------- ----------- ----------- ---------- ----------
--------- ----------- ----------- ---------- ----------
Total investment return (e)............. 6.27% 3.14% 25.1% 5.9% 15.68%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $284,069 $317,847 $251,428 $27,754 $71,376
Ratio of net investment income to
average net assets..................... 3.85% 3.30% 3.3%* 4.1%* 5.0%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.70% 1.67% 1.8%* 1.9%* 1.9%*
Without expense reductions............ 1.74% --%** --%** --%** --%**
Portfolio turnover rate++++............. 83% 117% 24% 53% 46%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.005, $0.02, and $0.03 for the year ended
October 31, 1993, 1992 and 1991, respectively. Without such
reimbursements, the expense ratios would have been 1.93%, 2.20% and
2.46% and the net investment income to average net assets would have
been 3.2%, 3.70% and 4.40%, for the year ended October 31, 1993, 1992
and 1991, respectively.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
------------------------------------------------------ CLASS+++
OCTOBER 22, ------------
YEAR ENDED 1992 JUNE 1, 1995
OCTOBER 31, TO TO
------------------------------------- OCTOBER 31, OCTOBER 31,
1995 1994 1993(D) 1992(D) 1995
--------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.21 $ 6.29 $ 5.28 $ 5.29 $ 6.24
--------- ----------- ----------- ------- ------------
Income from investment operations:
Net investment income................. 0.20 0.18 0.20 0.01 0.11
Net realized and unrealized gain
(loss) on investments................ 0.13 (0.03) 1.05 (0.02) 0.13
--------- ----------- ----------- ------- ------------
Net increase (decrease) from
investment operations.............. 0.33 0.15 1.25 (0.01) 0.24
--------- ----------- ----------- ------- ------------
Distributions to shareholders:
From net investment income............ (0.18) (0.17) (0.20) -- (0.13)
From net realized gain on
investments.......................... (0.01) (0.06) -- -- --
From sources other than net investment
income............................... -- -- (0.04) -- --
--------- ----------- ----------- ------- ------------
Total distributions................. (0.19) (0.23) (0.24) -- (0.13)
--------- ----------- ----------- ------- ------------
Net asset value, end of period.......... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 6.35
--------- ----------- ----------- ------- ------------
--------- ----------- ----------- ------- ------------
Total investment return (e)............. 5.57% 2.48% 24.3% (0.2)%(a) 3.83%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $356,796 $359,242 $150,768 $ 280 $ 944
Ratio of net investment income to
average net assets..................... 3.20% 2.65% 2.6% N/A(c) 4.20%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.35% 2.32% 2.5% N/A(c) 1.35%(b)
Without expense reductions............ 2.39% --%** --%** --%**(c) 1.39%(b)
Portfolio turnover rate++++............. 83% 117% 24% 53% 83%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.005, $0.02, and $0.03 for the year ended
October 31, 1993, 1992 and 1991, respectively. Without such
reimbursements, the expense ratios would have been 1.93%, 2.20% and
2.46% and the net investment income to average net assets would have
been 3.2%, 3.70% and 4.40%, for the year ended October 31, 1993, 1992
and 1991, respectively.
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Growth & Income 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 twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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
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 rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of 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, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than investments
in securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." 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 Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 Fund may use options to manage its exposure to the
stock or bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock or bond 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 collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $62,622,697
were on loan to brokers. The loans were secured by cash collateral of
$66,191,073. 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 period ended October 31, 1995, the Fund received $192,015 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$24,154,904, which expires in 2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $107,435. These
expenses have been amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the 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.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$80,112 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $19,017 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSC's in
the amount of $1,533,810. 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 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for 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 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
ended October 31, 1995, the Fund paid fund accounting fees of $40,735 to G.T.
Capital.
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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments and U.S. government
obligations, aggregated $445,884,925 and $478,744,953, respectively. Purchases
and sales of U.S. government obligations were $64,778,477 and $57,362,609,
respectively, for the year ended October 31, 1995.
4. CAPITAL SHARES
At October 31, 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
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. Latin
America Growth Fund; 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; 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 High
Income Fund; and 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- -------------------------
CLASS A: SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 11,447,072 $ 70,539,906 18,375,623 $ 115,141,878
Shares issued in connection with reinvestment of distributions............. 1,579,506 9,534,463 1,777,962 10,875,825
----------- ------------- ---------- -------------
13,026,578 80,074,369 20,153,585 126,017,703
Shares repurchased......................................................... (19,470,580) (119,773,578) (8,951,499) (55,403,713)
----------- ------------- ---------- -------------
Net increase (decrease).................................................... (6,444,002) $ (39,699,209) 11,202,086 $ 70,613,990
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- -------------------------
CLASS B: SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 9,868,499 $ 60,082,182 39,929,440 $ 250,659,375
Shares issued in connection with reinvestment of distributions............. 1,542,069 9,322,768 1,464,527 8,946,551
----------- ------------- ---------- -------------
11,410,568 69,404,950 41,393,967 259,605,926
Shares repurchased......................................................... (13,074,922) (79,926,629) (7,536,482) (46,576,041)
----------- ------------- ---------- -------------
Net increase (decrease).................................................... (1,664,354) $ (10,521,679) 33,857,485 $ 213,029,885
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 146,947 $ 928,364
Shares issued in connection with reinvestment of distributions............. 2,927 18,236
----------- -------------
149,874 946,600
Shares repurchased......................................................... (1,163) (7,362)
----------- -------------
Net increase............................................................... 148,711 $ 939,238
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
5. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $40,584 under these arrangements.
6. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's investment manager and
administrator, currently named G.T. Capital Management, Inc., will be changed to
"LGT Asset Management, Inc.", and G.T. Global Financial Services, Inc., which
serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was $0.228 per share (representing an approximate total of $22,862,317).
The total amount of taxes paid by the Fund to such countries was approximately
$0.019 per share (representing a total of $1,834,759).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$3,288,542 as capital gain dividends for the fiscal year ended October 31, 1995.
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT 1-
800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the
new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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
GROWTH & INCOME FUND, LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
GROSX602M
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
GT Global Latin America Growth Fund ("Fund") is a non-diversified mutual fund
organized as a separate series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end management investment company. This Statement of Additional
Information relating to the Advisor Class of the Fund is not a prospectus and
supplements and should be read in conjunction with the Fund's current Advisor
Class Prospectus dated February 29, 1996. A copy of the Fund's Prospectus is
available without charge by either writing the Fund at the above address or by
calling the Fund at the toll-free telephone number printed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 19
Execution of Portfolio Transactions...................................................................................... 20
Directors and Executive Officers......................................................................................... 22
Management............................................................................................................... 24
Valuation of Fund Shares................................................................................................. 25
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 31
Description of Debt Ratings.............................................................................................. 38
Financial Statements..................................................................................................... 40
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund will
normally invest at least 65% of its total assets in securities of a broad range
of Latin American issuers. Under current market conditions, the Fund expects to
invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. Though the Fund can normally
invest up to 35% of its total assets in U.S. securities, the Fund reserves the
right to be primarily invested in U.S. securities for temporary defensive
purposes or pending investment of the proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
LGT Asset Management is the investment manager of the Fund. In determining the
appropriate distribution of investments among various countries for the Fund,
LGT Asset Management ordinarily considers the following factors: prospects for
relative economic growth between the different countries in which the Fund may
invest; expected levels of inflation; government policies influencing business
conditions; the outlook for interest rates; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by the Fund, LGT Asset Management
ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
There may be times when, in the opinion of LGT Asset Management, prevailing
market, economic or political conditions warrant reducing the proportion of the
Fund's assets invested in equity securities and increasing the proportion held
in cash or short-term obligations denominated in U.S. dollars or other
currencies. A portion of the Fund's assets normally will be held in U.S. dollars
or short-term interest-bearing dollar-denominated securities to provide for
ongoing expenses and redemptions.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital, or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
Latin American countries, commercial banks act as securities broker/dealers,
investment advisers and underwriters or otherwise engage in securities-related
activities, which may limit the Fund's ability to hold securities issued by
banks. The Securities and Exchange Commission ("SEC") has proposed a rule which,
if adopted, may permit the Fund to invest in certain of these securities subject
to certain restrictions. The proposed rule excepts from the prohibition of the
1940 Act any acquisition by an investment company of securities of
securities-related companies provided that certain percentage limitations are
adhered to. The Fund has obtained an exemption from the SEC to permit the Fund
to invest in a manner that is consistent with the SEC's proposed rule.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. The Fund
intends to acquire Sovereign Debt, as defined in the Prospectus, to hold and
trade in appropriate circumstances as described in the Prospectus, as well as to
use to participate in Latin American debt conversion programs. LGT Asset
Management will evaluate opportunities to enter into debt conversion
transactions as they arise but does not currently intend to invest more than 5%
of the Fund's assets in such programs.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible 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 evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by the Fund in units or attached to
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by vote
of a majority of the Company's Board of Directors without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 25% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. 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 LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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, the Fund intends to enter into repurchase
agreements only with banks and dealers believed by LGT Asset Management to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. LGT Asset Management will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its total assets would be invested in such
repurchase agreements and other illiquid investments.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements, which involve the sale of
a security by the Fund and its agreement to repurchase the security at a
specified time and price. However, the Fund does not currently intend to engage
in reverse repurchase agreements with respect to more than 5% of its total
assets. The Fund will maintain, in a segregated amount with a custodian, cash,
U.S. government securities or other liquid, high grade debt securities in an
amount sufficient to cover its obligations under reverse repurchase agreements
with broker/dealers. No segregation is required for reverse repurchase
agreements with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker-dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund will also be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 LGT Asset
Management'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 LGT Asset Management 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 the Fund entered into a
short hedge because LGT Asset Management projected a decline in the price of
a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
investment prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options will generally be written on securities and currencies that, in the
opinion of LGT Asset Management are not expected to make any major price moves
in the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the
Statement of Additional Information Page 5
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time 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.
The Fund would generally write put options in circumstances where LGT Asset
Management wishes to purchase the underlying security or currency for the Fund's
portfolio at a price lower than the current market price of the security or
currency. In such event, the Fund would write a put option at an exercise price
that reduced by the premium received on the option, reflects the lower price it
is willing to pay. Since the Fund would also receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
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PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indicies and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American Style) or
on (European Style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options,
exercise them or permit them to expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when LGT Asset
Management 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.
The Fund may also purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options or securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American Style) or on (European Style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options may also be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
Style or on (European Style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American Style) or on
(European Style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL LATIN AMERICA GROWTH FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call or an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL LATIN AMERICA GROWTH FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Treasury Bills on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Treasury Bills on the same
exchange. In such instance the difference between the price at which the Futures
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GT GLOBAL LATIN AMERICA GROWTH FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
Markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL LATIN AMERICA GROWTH FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put),
at a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
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GT GLOBAL LATIN AMERICA GROWTH FUND
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts are usually entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract Sales limit the risk of
loss due to a decline in the value of the hedged currencies, at the same time
they limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which LGT Asset Management believes will have a
positive
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GT GLOBAL LATIN AMERICA GROWTH FUND
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash, U.S. government securities or other liquid,
high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in Latin
American countries, any change in the leadership or policies of the governments
of those countries or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse the liberalization of foreign investment policies now
occurring and thereby eliminate any investment opportunities which may currently
exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund
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GT GLOBAL LATIN AMERICA GROWTH FUND
will not also be expropriated, nationalized, or otherwise confiscated. If such
confiscation were to occur, the Fund could lose a substantial portion of its
investments in such countries. The Fund's investments would similarly be
adversely affected by exchange control regulations in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its total assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than will the sale of liquid securities such as
securities eligible for trading on U.S. securities exchanges or in the over-the-
counter markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United Staes, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. Iin recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to LGT Asset Management in accordance
with procedures approved by the Company's Board of Directors. LGT Asset
Management takes into account a number of factors in reaching liquidity
decisions, including, but not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security; (iii) the
number of dealers that have undertaken to make a market in the security; (iv)
the number of other potential purchasers; and (v) the nature of the security and
how trading is effected (e.g., the time needed to sell the security, how offers
are solicited and the mechanics of transfer). LGT Asset Management monitors the
liquidity of securities in the Fund's portfolio and periodically reports such
determinations to the Board of Directors. Moreover, as noted in the Prospectus,
certain securities, such as those subject to repatriation restrictions of more
than seven days, will generally be treated as illiquid.
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GT GLOBAL LATIN AMERICA GROWTH FUND
More than 10% of the Fund's total assets may consist of illiquid securities from
time to time either because of adverse events which occur following the purchase
of the securities which cause them to become illiquid or because liquid
securities are sold to meet redemption requests or other needs of the Fund.
Illiquid securities are more difficult to value accurately due to, among other
things, the fact that such securities often trade infrequently or only in
smaller amounts.
On December 31, 1995 the market capitalizations of listed equity securities on
the major exchanges in Argentina, Brazil, Chile and Mexico were US$26.0 billion,
$77.0 billion, $36.9 billion and $59.3 billion, respectively. By comparison, at
December 31, 1995 the market capitalization of the NYSE alone was US$6.0
trillion. A high proportion of the shares of many Latin American companies may
be held by a limited number of persons, which may further limit the number of
shares available for investment by the Fund. A limited number of issuers in
most, if not all, Latin American securities markets may represent a
disproportionately large percentage of market capitalization and trading value.
The limited liquidity of Latin American securities markets also may affect the
Fund's ability to acquire or dispose of securities at the price and time it
wishes to do so. In addition, certain Latin American securities markets,
including those of Argentina, Brazil, Chile and Mexico, are susceptible to being
influenced by large investors trading significant blocks of securities or by
large dispositions of securities resulting from the failure to meet margin calls
when due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. The
stock markets in Brazil declined sharply in mid 1989, and closed briefly,
following a large settlement failure. Another significant decline occurred in
the first quarter of 1990. In 1987, the Mexican stock exchange experienced a
severe correction, its index declining over 70 percent. This market volatility
may result in greater volatility in the Fund's net asset value than would be the
case for companies investing in domestic securities. If the Fund were to
experience unexpected net redemptions, it could be forced to sell securities in
its portfolio without regard to investment merit, thereby decreasing the asset
base over which Fund expenses can be spread and possibly reducing the Fund's
rate of return.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
Recent relevant foreign investment restrictions in each of the four principal
economies of Latin America, which are susceptible to significant and immediate
changes, can be summarized in part as follows:
ARGENTINA. Previous restrictions on foreign investment have been abolished
and prior approval of such investment is no longer required (except where
required in specific statutes governing certain activities), ensuring equal
treatment of national and foreign capital applied to economic activities. At
present foreign capital can move freely in and out of Argentina and no foreign
exchange restrictions are applied to dividend or capital gains remittance.
BRAZIL. Under regulations adopted by the government of Brazil, the Fund is
able to purchase Brazilian securities without regard to any diversification or
repatriation restrictions. However, the regulations require that the Fund's
investments be limited to securities issued by publicly-held corporations
acquired on the Brazilian stock exchanges or on over-the-counter markets
organized by the Commission de Valores Mobiliarios (CVM) or units of certain
Financial Investment Funds. The Fund's authority to invest in Brazil pursuant to
this regulation remains subject to approval by the CVM. In addition, the Fund is
required to appoint a Brazilian administrator to perform certain functions with
respect to its holdings of Brazilian securities.
CHILE. Direct investment by foreign investors in Chile is subject to certain
Chilean investment restrictions, including a requirement that invested capital
must remain in Chile for a minimum of at least one year. The remittance of
dividends and capital gains can be effected without material restrictions on
timing and amount. Indirect investments, however, may be made through already
established investment funds and such investments will not be subject to the
restriction regarding residency of capital, although they will be subject to the
limitations, described above, regarding investments by
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GT GLOBAL LATIN AMERICA GROWTH FUND
the Fund in the securities of other investment companies. In addition to
investing indirectly in the Chilean market, the Fund may establish its own
foreign investment fund in Chile for which a Chilean administrator will be
required. The Fund may also gain access to investment in Chile via the 18
American Depositary Receipts ("ADRs") currently traded in the U.S. on the New
York Stock Exchange. LGT Asset Management believes these events significantly
broadened the Fund's ability to gain access to the Chilean market.
MEXICO. Generally, foreigners may directly acquire shares of Mexican
companies up to a limit of 49 percent of the share capital of the issuer without
prior approval. Foreigners may acquire shares in the share capital of certain
Mexican listed companies usually reserved to Mexican nationals, and may acquire
in excess of the 49 percent limit referred to above, through trust arrangements
with Nacional Financiera, S.N.C. ("Nafin"), the Mexican government development
finance bank. Under this arrangement Nafin will acquire the securities that the
Fund purchases and then issue Ordinary Certificates of Participation ("CEPOS").
As a holder of the CEPOS, the Fund would have all rights of the shares acquired,
but it would not have voting rights. There are no restrictions on the movement
of capital in and out of Mexico. Dividends and capital gains can also be freely
remitted, subject to any withholding tax.
VENEZUELA. In order to stabilize the country's financial system, the
government suspended foreign exchange trading on July 6, 1994. The market was
"officially" opened July 11, however, the Bolivar did not begin trading until
January 10, 1995 at a level of 212 and 220 (the level held since December 1994).
The Venezuelan Exchange Administration Board issued Resolution No. 41 regarding
foreign investment registration and repatriation for capital dividends and
interest. The Resolution provides that all investment should be registered with
the Superintendency of Foreign Investment (SEIX) and the Technical
Administration Exchange Office (OTAC). Article 2 of the Resolution states that
"investments" is defined as those transactions executed through the local stock
exchange (this prohibits OTC transaction proceeds from being eligible for
repatriation).
Resolution No. 41 also required refiling by funds previously approved. The Fund
has complied with the regulations and has obtained approval by the Regulatory
Commission. This avoids jeopardizing the assets held by the Fund.
In November 1994 the government passed a Resolution allowing foreign investors
to repatriate without restrictions under the new controlled exchange system. It
is now possible to repatriate any capital or income provided that the OTAC has
proof that the investor has obtained a tax identification code and complied with
all tax return filing requirements.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, LGT Asset Management will take appropriate
steps to evaluate the proposed investment, which may include on-site inspection
of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. In addition, for companies that keep accounting records
in local currency, inflation accounting rules in some Latin American countries
require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the company's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. Consequently, data concerning Latin
American securities shown elsewhere in this Statement of Additional Information
may be materially affected by restatements for inflation and may not accurately
reflect the real conditions of companies and securities markets. There is
substantially less publicly available information about foreign companies,
including Latin American companies, and the governments of Latin American
countries than there are reports and ratings published about U.S. companies and
the U.S. Government. In addition, where public information is available, it may
be less reliable than such information regarding U.S. issuers. Issuers of
securities in foreign jurisdictions are generally not subject to the same degree
of regulation as are U.S. issuers with respect to such matters as restrictions
on market manipulation, insider trading rules, shareholder proxy requirements
and timely disclosure of information.
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GT GLOBAL LATIN AMERICA GROWTH FUND
CURRENCY FLUCTUATIONS. Because the Fund under normal circumstances will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. LGT Asset Management will consider such difficulties
when determining the allocation of the Fund's assets, although LGT Asset
Management does not believe that such difficulties will have a material adverse
effect on the Fund's portfolio trading activities.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Emerging securities
markets, such as the markets of Latin America, are substantially smaller, less
developed, less liquid and more volatile than the major securities markets. The
limited size of emerging securities markets and limited trading volume in
issuers compared to the volume of trading in U.S. securities could cause prices
to be erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets. In addition, securities traded in certain emerging markets may be
subject to risks due to the inexperience of financial intermediaries, a lack of
modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of permanent or temporary termination of
trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt.
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GT GLOBAL LATIN AMERICA GROWTH FUND
Sovereign debtors may also be dependent on expected disbursements from foreign
governments, multilateral agencies and others abroad to reduce principal and
interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a sovereign debtor's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due, may result in the cancellation of such third
parties' commitments to lend funds to the sovereign debtor, which may further
impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the Latin American countries in which the Fund expects
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect the Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While LGT Asset Management intends to manage the Fund's
portfolio in a manner that will minimize the exposure to such risks, there can
be no assurance that adverse political changes will not cause the Fund to suffer
a loss of interest or principal on any of its holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, the Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If the Fund were
to experience unexpected net redemptions, it may be forced to sell Sovereign
Debt in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign country issuers, thereby reducing
the Fund's net investment income or delaying the receipt of income where those
taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Emerging securities
markets, such as the markets of Latin America, are substantially smaller, less
developed, less liquid and more volatile than the major securities markets. The
limited size of emerging securities markets and limited trading volume in
issuers compared to the volume of trading in U.S. securities could cause prices
to be erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets. In addition, securities traded in certain emerging markets may be
subject to risks due to the inexperience of financial intermediaries, a lack of
modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of permanent or temporary termination of
trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(4) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets (at the
lower of cost or fair market value). The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5%
of its total assets are outstanding. This restriction shall not prevent the
Fund from entering into reverse repurchase agreements, provided that reverse
repurchase agreements, and any other transactions constituting borrowing by
the Fund may not exceed one-third of the Fund's total assets. In the event
that the asset coverage for the Fund's borrowings falls below 300%, the Fund
will reduce, within three days (excluding Sundays and holidays), the amount
of its borrowings in order to provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities;
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
For purposes of the Fund's concentration policy contained in limitation (1),
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government are considered to be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies of the
Fund and may be changed by vote of a majority of the Company's Board of
Directors without shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(3) Invest more than 10% of its total assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are 'in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
The Fund has the authority to invest up to 10% of its total assets in shares of
other investment companies pursuant to the 1940 Act. The Fund may not invest
more than 5% of its total assets in any one investment company or acquire more
than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Fund's portfolio transactions
and the selection of broker/dealers who execute such transactions on behalf of
the Fund. In executing portfolio transactions, LGT Asset Management seeks the
best net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
While LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, LGT Asset Management may select
brokers to execute the Fund's portfolio transactions on the basis of the
research and brokerage services they provide to LGT Asset Management for its use
in managing the Fund and its other advisory accounts. Such services may include
furnishing analyses, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such brokers are in addition to,
and not in lieu of, the services required to be performed by LGT Asset
Management under the Management Contract (defined below). A commission paid to
such broker/dealers may be higher than that which another qualified broker would
have charged for effecting the same transaction, provided that LGT Asset
Management determines in good faith that such commission is reasonable in terms
either of that particular transaction or the overall responsibility of LGT Asset
Management to the Fund and its other clients and that the total commissions paid
by the Fund will be reasonable in relation to the benefits received by the Fund
over the long term. Research services may also be received from dealers who
execute Fund transactions.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Fund toward payment of the Fund's expenses, such
as transfer agent and custodian fees.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Investment decisions for the Fund and for other investment accounts managed by
LGT Asset Management are made independently of each other in light of differing
conditions. However, the same investment decision may occasionally be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, LGT Asset Management may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which LGT
Asset Management serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
United States transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest are generally traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of Liechtenstein Global Trust. The Company's Board of Directors has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to such affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations. For the Fund's fiscal years ended October 31, 1995,
1994 and 1993, the Fund paid aggregate brokerage commissions of $891,513,
$708,799 and $616,803, respectively.
PORTFOLIO TURNOVER AND TRADING
The portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the Fund's average month-end portfolio
value, excluding short-term investments. For purposes of this calculation,
portfolio securities exclude purchases and sales of debt securities having a
maturity at the date of purchase of one year or less. The Fund engages in
portfolio trading when LGT Asset Management has concluded that the sale of a
security owned by the Fund and/or the purchase of another security of better
value can enhance principal and/or increase income. A security may be sold to
avoid any prospective decline in market value, or a security may be purchased in
anticipation of a market rise. Consistent with the Fund's investment objective,
a security also may be sold and a comparable security purchased coincidentally
in order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities. Although the Fund does
not intend generally to trade for short-term profits, the securities in the
Fund's portfolio will be sold whenever management believes it is appropriate to
do so, without regard to the length of time a particular security may have been
held. The Fund's portfolio turnover rate will not be a limiting factor when LGT
Asset Management deems portfolio changes appropriate. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly, and may result in the realization of net
capital gains that are taxable when distributed to each Fund's shareholders. The
Fund's portfolio turnover rates for the fiscal years ended October 31, 1995 and
1994 were 125% and 155%, respectively.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust since 1995; Director and President of LGT Asset Management Holdings, Inc. ("LGT
50 California St. Asset Management Holdings") since 1988; Director and President of LGT Asset Management
San Francisco, CA 94111 since 1989; Director of GT Global since 1987 President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and President of G.T.
Insurance from 1992 to 1995. Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group, Inc. and various other companies. Mr. Anderson also is
Suite 400 a director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Ms. 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 LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989, Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<S> <C>
Helge K. Lee, 49 Senior Vice President and General Counsel of LGT Asset Management
Vice President and Secretary Holdings, LGT Asset Management, GT Global, GT Services and G.T.
50 California Street Insurance since February, 1996. Senior Vice President, Secretary and
San Francisco, CA 94111 General Counsel of LGT Asset Management Holdings, LGT Asset Management,
GT Global, GT Services and G.T. Insurance from May 1994 to February
1996. Mr. Lee was the Senior Vice President, General Counsel and
Secretary of Strong/Corneliuson Management, Inc. and Secretary of each
of the Strong Funds from October 1991 through May 1994. For more than
five years prior to October 1991, he was a shareholder in the law firm
of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995, Senior Vice
Vice President and Chief President - Finance and Administration of GT Global, GT Services and
Financial Officer G.T. Insurance, Senior Vice President -- Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was a Vice President - Finance of G.T. Insurance from 1992 to 1994; and
a Director of LGT Asset Management, GT Global and GT Services since
1991.
Kenneth W. Chancey, 50 Vice President - Mutual Fund Accounting of LGT Asset Management since
Vice President and 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Principal Accounting Officer from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of G.T. Insurance since 1992 and Assistant General
San Francisco, CA 94111 Counsel of LGT Asset Management, GT Global and G.T. Services since 1991.
From 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus
Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. From 1993 to
San Francisco, CA 94111 1994, Mr. Thelander was an associate at Kirkpatrick & Lockhart LLP (a
law firm). Prior thereto, he was an attorney with the U.S. Securities
and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc. and G.T. Global Developing
Markets Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a
Trustee of G.T. Greater Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio, Global
Investment Portfolio and Growth Portfolio, which are also registered investment
companies managed by LGT Asset Management. Each Director and Officer serves in
total as a Director and or Trustee and Officer, respectively, of 10 registered
investment companies with 40 series managed or administered by LGT Asset
Management. The Company pays each Director, who is not a director, officer or
employee of LGT Asset Management or any affiliated company, $5,000 per annum,
plus $300 per Fund for each meeting of the Board attended, and reimburses travel
and other expenses incurred in connection with attendance at such meetings.
Other Directors and officers receive no compensation or expense reimbursement
from the Company. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley, who are not directors, officers or
employees of LGT Asset Management or any affiliated company, received total
compensation of $36,705.30, $34,230.22, $36,755.58 and $33,706.85, respectively,
from the Company for their services as Directors. For the year ended October 31,
1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley each received
total compensation of $92,176.78, $87,868.84, $92,280.90 and $86,957.55,
respectively, from the 40 GT Global Mutual Funds for which he or she serves as a
Director or Trustee. Fees and expenses disbursed to the Directors contained no
accrued or payable pension or retirement benefits. As of the date of this
Statement of Additional Information, the officers and Directors and their
families as a group owned in the aggregate beneficially or of record less than
1% of the outstanding shares of the Fund or of all the Company's funds in the
aggregate.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION
LGT Asset Management serves as the Fund's investment manager and administrator
under an Investment Management and Administration Contract ("Management
Contract") between the Company and LGT Asset Management. As investment manager
and administrator, LGT Asset Management makes all investment decisions for the
Fund and administers the Fund's affairs. Among other things, LGT Asset
Management furnishes the services and pays the compensation and travel expenses
of persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company and the Fund, and provides suitable office space,
necessary small office equipment and utilities.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
LGT Asset Management may terminate the Contract without penalty upon sixty (60)
days' written notice. The Management Contract terminates automatically in the
event of its assignment (as defined in the 1940 Act).
Under the Management Contract, LGT Asset Management has agreed to reimburse the
Fund if the Fund's annual ordinary expenses exceed the most stringent expense
limitations prescribed by any state in which the Fund's shares are offered for
sale. Currently, the most restrictive applicable limitation provides that the
Fund's expenses may not exceed an annual rate of 2 1/2% of the first $30 million
of average net assets, 2% of the next $70 million of average net assets and
1 1/2% of assets in excess of that amount. Expenses which are not subject to
this limitation are interest, taxes, the amortization of organizational
expenses, payments of distribution fees, in part, and extraordinary expenses.
LGT Asset Management and GT Global have undertaken to limit the Fund's Advisor
Class share expenses to 1.90% of average daily net assets of the Advisor Class
shares, and LGT Asset Management has agreed to reimburse the Fund if the Fund's
annual ordinary expenses exceed 1.90% of average daily net assets of Fund's
Advisor Class shares (exclusive of brokerage commissions, interest, taxes,
certain expenses attributable to investing outside the U.S. and extraordinary
expenses).
For the fiscal year ended October 31, 1995, the Fund paid management and
administration fees in the amount of $3,913,429 to LGT Asset Management. For the
fiscal year ended October 31, 1994, the Fund paid management and administration
fees in the amount of $3,601,301 to LGT Asset Management and administration fees
in the amount of $1,013,499 were paid to LGT Asset Management by the Fund for
the fiscal year ended October 31, 1993. However, during that period LGT Asset
Management reimbursed fees of $93,920 to the Fund, with a net payment to LGT
Asset Management of $920,579.
Certain Latin American countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are continuously offered through the Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent is also reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationary and office supplies.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
LGT Asset Management serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of all
registered mutual funds advised by LGT Asset Management ("GT Global Mutual
Funds") and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets. As of October 31,
1995, the Fund paid LGT Asset Management fees of $24,138 for such accounting
services.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by LGT Asset Management, GT Global and
other agents. These expenses include, in addition to the advisory and brokerage
fees discussed above, legal and audit expenses, custodian and transfer agency
and pricing and accounting fees, directors' fees, organizational fees, fidelity
bond and other insurance premiums, taxes, extraordinary expenses and the
expenses of reports and prospectuses sent to existing investors. The allocation
of general Company expenses and expenses shared by the Fund and other funds
organized as series of the Company with one another are allocated on a basis
deemed fair and equitable, which may be based on the relative net assets of the
Fund or the nature of the services performed and relative applicability to the
Fund. Expenditures, including costs incurred in connection with the purchase or
sale of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges are valued at the last sale price on the exchange 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 LGT Asset Management to be the primary market.
Securities traded in the over-the-counter market are valued at the last
available bid price prior to the time of valuation. Securities and assets for
which market quotations are not readily available (including restricted
securities which are subject to limitations as to their sale) are valued at fair
value as determined in good faith by or under the direction of the Board of
Directors.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term debt investments
are amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. 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 LGT Asset Management on that day. When market
quotations for futures and options on futures held by the Fund are readily
available, those positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors are also generally considered, such as the cost of
the investment, the market value
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
of any unrestricted securities of the same class (both at the time of purchase
and at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Latin American securities trading may not take place on all days on which the
NYSE is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Consequently, the calculation of the Fund's net
asset value may not take place contemporaneously with the determination of the
prices of securities held by the Fund. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of regular trading on the NYSE will not be reflected in the Fund's net asset
value unless LGT Asset Management, under the supervision of the Company's Board
of Directors, determines that the particular event would materially affect net
asset value. As a result, the Fund's net asset value may be significantly
affected by such trading on days when a shareholder cannot purchase or redeem
shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND
REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
A shareholder may exchange shares of the Fund for shares of other GT Global
Mutual Funds, based on their respective net asset values without imposition of
any sales charges provided the registration remains identical. The exchange
privilege is not an option or right to purchase shares but is permitted under
the current policies of the respective GT Global Mutual Funds. The privilege may
be discontinued or changed at any time by any of the funds upon 60 days' written
notice to the
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
shareholders of such fund and is available only in states where the exchange may
be legally made. Advisor Class shares may be exchanged only for Advisor Class
shares of other GT Global Mutual Funds. Before purchasing shares through the
exercise of the exchange privilege, a shareholder should obtain and read a copy
of the prospectus of the fund to be purchased and should consider the investment
objectives of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
will be borne by the Fund. Proceeds of less than $1,000 will be mailed to the
shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which makes it not reasonably
practicable for the Fund to dispose of securities owned by it or fairly to
determine the value of its assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketed securities. Such securities would be valued at the same value assigned
to them in computing the net asset value per share. Shareholders receiving such
securities would incur brokerage costs in selling any such securities so
received. However, despite the foregoing, the Company has filed with the SEC an
election pursuant to Rule 18f-1 under the 1940 Act. This means that the Fund
will pay in cash all requests for redemption made by any shareholder of record,
limited in amount with respect to each shareholder during any ninety-day period
to the lesser of $250,000 or 1% of the value of the net assets of the Fund at
the beginning of such period. This election will be irrevocable so long as Rule
18f-1 remains in effect, unless the SEC by order upon application permits the
withdrawal of such election.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following, that
were held for less than three months -- options or Futures (other than those on
foreign currencies), or foreign currencies (or options, Futures or Forward
Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (4) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
represents income from foreign sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from disposition of, stock of a PFIC (collectively "PFIC income"), plus
interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income would be included
in the Fund's investment company taxable income and, accordingly, would not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise-Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from foreign currencies (except certain gains that
may be excluded by future regulations), and gains from the disposition of
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gain or loss). Each Section 988
gain or loss generally is computed separately and treated as ordinary income or
loss. In the case of overlap between Sections 1256 and 988, special provisions
determine the character and timing of any income, gain or loss. The Fund
attempts to monitor Section 988 transactions to minimize any adverse tax impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly GT Management PLC in London, England; LGT Asset
Management Ltd., formerly GT Management (Asia) Ltd. in Hong Kong; LGT Investment
Trust Management Ltd., formerly GT Management (Japan) in Tokyo; LGT Asset
Management Pte. Ltd., formerly GT Management (Singapore) PTE Ltd. located in
Singapore; LGT Asset Management Ltd., formerly GT Management (Australia) Ltd.,
located in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management
GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P., will conduct an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company and/or the Fund at any time or to grant the use of
such names to any other company.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return", as referred to in the Prospectus (see "Other
Information -- Performance Information"), is calculated separately for Class A,
Class B and Advisor Class shares of the Fund, as follows: Standardized Return
("T") is computed by using the value at the end of the period ("EV") of a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the SEC: P(1+T) to the (n)th
power = EV. The following assumptions will be reflected in computations made in
accordance with this formula: (1) for Class A shares, deduction of the maximum
sales charge of 4.75% from the $1,000 initial investment; (2) for Class B
shares, deduction of the applicable contingent deferred sales charge imposed on
a redemption of Class B shares held for the period; (3) reinvestment of
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
dividends and other distributions at net asset value on the reinvestment date
determined by the Board; and (4) a complete redemption at the end of any period
illustrated.
The Fund's Standardized Return for its Class A shares stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (40.15)%
August 13, 1991 (commencement of
operations) to October 31, 1995........ 4.62%
</TABLE>
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns, for the periods shown,
were:
<TABLE>
<CAPTION>
STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (40.35)%
April 1, 1993 (commencement of
operations) to October 31, 1995........ (0.57)%
</TABLE>
The Fund's Standardized Return for its Advisor Class shares stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995......................................... (3.45)%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted.
As discussed in the Prospectus, the Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted.
The Fund's Non-Standardized Returns, for its Class A shares, stated as aggregate
total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
AGGREGATE TOTAL
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.16)%
August 13, 1991 (commencement of
operations) to October 31, 1995........ 27.02%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.42)%
April 1, 1993 (commencement of
operations) to October 31, 1995........ 1.35%
</TABLE>
The Fund's Non-Standardized Returns, for its Advisor Class shares, stated as
aggregate total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
AGGREGATE TOTAL
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
June 1, 1995 (commencement of
operations) to October 31, 1995........ (3.45)%
</TABLE>
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
The Fund's Non-Standardized Returns, for its Class A shares, stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.16)%
August 13, 1991 (commencement of
operations) to October 31, 1995........ 5.83%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995............. (37.42)%
April 1, 1993 (commencement of
operations) to October 31, 1995........ 0.52%
</TABLE>
The Fund's Non-Standardized Returns, for its Advisor Class shares, stated as
average annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
June 1, 1995 (commencement of
operations) to October 31, 1995........ (3.45)%
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS.
Information relating to foreign market performance, market capitalization and
diversification is based on sources believed to be reliable, but is not
all-inclusive nor warranted as to accuracy by the Fund or LGT Asset Management.
The authors and publishers of such material are not to be considered as
"experts" under the Securities Act of 1933 on account of the inclusion of such
information herein. Stocks chosen by Morgan Stanley Capital International for
inclusion in its various international market indices may not necessarily
constitute a representative cross-section of the particular markets.
GT Global believes information relating to foreign market performance, market
capitalization and diversification may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in equity and/or debt securities on a global basis.
However, this data is not a representation of the past performance of the Fund
nor is it a prediction of such performance. The performance of the Fund will
differ from the historical performance of the indices represented above. The
performance of indices does not take expenses into account, while the Fund
incurs expenses in its operations that will reduce performance. Moreover, the
Fund is actively managed, i.e. LGT Asset Management as the Fund's investment
manager actively purchases and sells securities in seeking the Fund's investment
objective. Moreover, the Fund's concentration in the equity and debt securities
of Latin American issuers will cause the Fund's performance to differ from the
general equity and bond indices.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, 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 Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service (excluding
Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. 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.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger and/or other firms as
applicable, or to specific funds or groups of funds within or without such
peer group. Morningstar is a mutual fund rating service that also rates
mutual funds on the basis of risk-adjusted performance. Morningstar ratings
are calculated from a fund's three, five and ten year average annual returns
with appropriate fee adjustments and a risk factor that reflects fund
performance relative to the three-month U.S. Treasury bill monthly returns.
Ten percent of the funds in an investment category receive five stars and
22.5% receive four stars. The ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) Morgan Stanley Capital International Latin America Emerging Market
Indices, including the Morgan Stanley Emerging Markets Free Latin America
Index (which excludes Mexican banks and securities companies which cannot be
purchased by foreigners) and the Morgan Stanley Emerging Markets Global
Latin America Index. Both indices include 60% of the market capitalization
of the following countries: Argentina, Brazil, Chile and Mexico. The indices
are weighted by market capitalization and are calculated without dividends
reinvested.
(14) International Financial Corporation ("IFC") Latin American Indices
which include 60% of the market capitalization in the covered countries and
are market weighted. One index includes dividends and one excludes
dividends.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(22) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wider range
of securities.
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, 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, GT Global may use performance rankings,
ratings and commentary reported periodically in national financial publications,
included but not limited to, Money Magazine, Smart Money, Global Finance,
EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin Finance, the
Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal
Finance, Barron's, The Financial Times, USA Today, The New York Times, Far
Eastern Economic Review, The Economist and Investors Business Digest. Each Fund
may compare its performance to that of other compilations indices of comparable
quality to those listed above and other indices which may be developed and made
available.
GT Global believes that the above information relating to foreign market
performance, market capitalization and diversification may be useful to
investors considering whether and to what extent to diversify their investments
through the purchase of mutual funds investing in securities on a global basis.
However, this data is not a prediction of the performance of the Fund. The
performance of the Fund will differ from the historical performance of the
indices represented above. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. Moreover, the Fund is actively managed, i.e. LGT Asset Management
as the Fund's investment manager actively purchases and sells securities in
seeking the Fund's investment objective; this will cause the performance of the
Fund to differ from the indices shown above.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global 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.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviction and R2 in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable an
investor to make pre-tax contributions. Because of their advantages, these
retirement plans may produce returns superior to comparable non-retirement
investments. The Funds may also discuss these plans which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 each
year to an IRA (or if less, 100% of compensation). If your spouse is not
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
contributions may not be made for the year you become 70 1/2, or thereafter.
Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible roll-over distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified employee pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit-sharing plan, additionally permits the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and GT Global will quote certain information
regarding individual countries, regions, world stock exchanges, and economic and
demographic statistics from sources GT Global deems reliable, including, but not
limited to, the economic and financial data of such financial organizations 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 Industry
Indices, International Finance Corporation.
(3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
(4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
(5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
(6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
(7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
(8) Gross Domestic Product (GDP): Datastream and The World Bank.
(9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
(10) Population: The World Bank, Datastream and United Nations.
(11) Average annual growth rate (%) of population: The World Bank, Datastream
and United Nations.
(12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
(13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
(14) Top three companies by country, industry or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
(15) Foreign direct investments to developing countries: The World Bank and
Datastream.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, technology,
other basic infrastructure, financial services, health care services and
supplies, consumer products and services and telecommunications equipment
and services (sources of such information may include, but would not be
limited to, The World Bank, OECD, IMF, Bloomberg and Datastream.
(17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
(18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management.
(19) Political and economic structure of countries: Economist Intelligence Unit.
(20) Government and corporate bonds - credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
(21) Dividends yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset Management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE LGT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the LGT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee which sets broad guidelines for asset
allocation and currency management based on LGT Asset Management's own
macroeconomic forecasts and research from our worldwide offices. The bottom-up
approach utilizes regional teams of individual portfolio managers to implement
the committee's guidelines by selecting local securities that offer strong
growth potential.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1,"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of senior short-term promissory obligations. Prime-1 repayment ability
will often be evidenced by the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protections; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This normally will be evidenced
by many of the characteristics cited above, but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'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 payments
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.
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
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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." Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond because margins of protection may not be as large as in
Aaa securities, fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- These bonds are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
Speculative grade ratings are as follows:
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-'rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have a currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on the filing of a bankruptcy petition if debt service payments are
jeopardized.
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 GT Global Latin America Growth Fund at
October 31, 1995 and for the period then ended appear on the following pages.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Latin America Growth Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Latin America Growth Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, 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 four years in the period
then ended and for the period from August 13, 1991 (commencement of operations)
to October 31, 1991. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Latin America Growth Fund as of October 31, 1995, the results of 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 four
years in the period then ended and for the period from August 13, 1991
(commencement of operations) to October 31, 1991, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (17.4%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ............ MEX 1,038,200 $ 13,560,757 4.3
PAPER/PACKAGING
Cemex, S.A. de C.V.: ................................... MEX -- -- 3.7
CEMENT
"B" - ADR{\/} ........................................ -- 984,875 6,155,469 --
"B" .................................................. -- 1,825,000 5,639,045 --
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ..... CHLE 176,300 7,647,013 2.4
CHEMICALS
Dixie Toga{::} -/- ..................................... BRZL 6,938,646 6,494,832 2.0
PAPER/PACKAGING
La Cementos Nacional, C.A. - 144A GDR{.} -/- {\/} ..... ECDR 18,176 3,635,200 1.1
CEMENT
Companhia Siderurgica Nacional S.A.: ................... BRZL -- -- 1.2
METALS - STEEL
Common-/- ............................................ -- 112,958,000 2,420,109 --
ADR-/- {\/} .......................................... -- 57,500 1,207,500 --
White Martins S.A. ..................................... BRZL 2,319,570,000 2,243,578 0.7
CHEMICALS
Empaques Ponderosa, S.A. de C.V. "B"-/- ................ MEX 770,000 1,622,191 0.5
PAPER/PACKAGING
Cemento Argos S.A.-/- .................................. COL 260,248 1,565,951 0.5
CEMENT
Venezolana de Prerreducidos Caroni C.A. (Venprecar) -
GDR{\/} ............................................... VENZ 270,500 1,420,125 0.4
METALS - STEEL
Venezolana de Cementos, S.A.C.A.: ...................... VENZ -- -- 0.4
CEMENT
"A" .................................................. -- 1,094,080 1,213,730 --
"B" .................................................. -- 7 7 --
Venezolana de Pulpa Y Papel "A" ........................ VENZ 916,738 455,293 0.1
FOREST PRODUCTS
Melpaper S.A. Preferred-/- ............................. BRZL 1,950,000 294,072 0.1
PAPER/PACKAGING
Papelera Inversora S.A.-/- ............................. ARG 3,616 8,136 --
PAPER/PACKAGING
------------
55,583,008
------------
Energy (17.1%)
Centrais Eletricas Brasileiras S.A. (Eletrobras): ...... BRZL -- -- 3.3
ELECTRICAL & GAS UTILITIES
"B" Preferred-/- ..................................... -- 27,400,000 7,808,216 --
Common-/- ............................................ -- 9,500,000 2,697,348 --
Empresa Nacional de Electricidad S.A. - ADR{\/} ........ CHLE 474,000 10,191,000 3.2
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ............................... CHLE 424,200 10,180,800 3.2
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{::} {\/} ....... BOL 247,100 7,196,788 2.3
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ........................ VENZ 6,589,477 4,377,041 1.4
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
MetroGas S.A. - ADR{\/} ................................ ARG 400,000 $ 3,400,000 1.1
OIL
Petrobras Distribuidora S.A. Preferred-/- ............. BRZL 105,030,000 3,309,838 1.0
ENERGY SOURCE
Companhia Energetica de Minas Gerais (Cemig)
Preferred ............................................. BRZL 146,792,050 3,144,999 1.0
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A. - ADR-/- {\/} ........... ARG 110,857 1,884,569 0.6
ELECTRICAL & GAS UTILITIES
------------
54,190,599
------------
Finance (15.5%)
Banco Bradesco S.A. Preferred .......................... BRZL 1,463,332,287 13,392,953 4.2
BANKS-MONEY CENTER
Banco Itau S.A. Preferred .............................. BRZL 37,330,000 11,065,055 3.5
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR-/- {\/} ........................................... CHLE 279,300 6,842,850 2.2
OTHER FINANCIAL
Uniao Bancos Brasileiras "A" Preferred ................. BRZL 170,170,000 5,964,357 1.9
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B" .... MEX 2,565,000 4,395,084 1.4
BANKS-MONEY CENTER
Seguros Comercial America S.A. "B"-/- .................. MEX 11,416,000 2,725,730 0.9
INSURANCE - MULTI-LINE
Grupo Financiero BanCrecer, S.A. de C.V. "B"-/- ........ MEX 6,164,599 2,337,699 0.7
BANKS-MONEY CENTER
Grupo Financiero Bancomer, S.A. de C.V. ................ MEX -- -- 0.7
BANKS-MONEY CENTER
"B"-/- ............................................... -- 7,167,000 1,852,146 --
"L"-/- ............................................... -- 817,296 189,401 --
Banco Ganadero S.A. - ADR-/- {\/} ...................... COL 7,100 69,225 --
BANKS-MONEY CENTER
------------
48,834,500
------------
Services (13.0%)
Santa Isabel S.A. - ADR{\/} ............................ CHLE 449,800 10,176,725 3.2
RETAILERS-FOOD
Telecomunicacoes Brasileiras S.A. (Telebras)
Preferred ............................................. BRZL 210,000,000 8,515,757 2.7
TELEPHONE NETWORKS
CPT Telefonica De Peru "B" ............................ PERU 4,288,446 7,668,082 2.4
TELEPHONE NETWORKS
Lojas Americanas S.A. Preferred-/- .................... BRZL 256,735,469 6,141,358 1.9
RETAILERS-OTHER
Telecom Argentina S.A. - ADR{\/} ....................... ARG 87,000 3,338,625 1.1
TELEPHONE NETWORKS
Telefonica de Argentina S.A. - ADR{\/} ................. ARG 125,000 2,593,750 0.8
TELEPHONE NETWORKS
Gran Cadena de Almacenes Colombianos S.A.: ............. COL -- -- 0.8
RETAILERS-OTHER
144A ADR{.} {\/} .................................... -- 151,600 1,932,900 --
Common ............................................... -- 544,164 611,206 --
Carulla y Compania S.A. - 144A ADR{.} -/- {\/} ......... COL 54,000 405,000 0.1
RETAILERS-FOOD
------------
41,383,403
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Multi Industry/Miscellaneous (10.1%)
Grupo Carso, S.A. de C.V. "A1"-/- ...................... MEX 2,140,000 $ 11,210,955 3.5
CONGLOMERATE
San Luis "CPO"-/- ...................................... MEX 1,698,000 7,989,185 2.5
CONGLOMERATE
Alfa, S.A. de C.V. ..................................... MEX 599,500 6,820,154 2.1
CONGLOMERATE
Grupo Sidek, S.A. de C.V.: ............................. MEX -- -- 2.0
CONGLOMERATE
ADR-/- {\/} .......................................... -- 1,262,900 3,315,113 --
"B"-/- ............................................... -- 6,005,000 2,850,688 --
"A"-/- ............................................... -- 980,000 440,449 --
------------
32,626,544
------------
Metals - Non-Ferrous (8.7%)
Companhia Vale do Rio Doce Preferred .................. BRZL 66,900,000 10,784,711 3.4
Grupo Mexico S.A. "B" .................................. MEX 1,860,924 7,775,630 2.5
Cia de Minas Buenaventura "C" ......................... PERU 1,011,948 5,562,363 1.8
Paranapanema S.A. Min., Ind. E Construacao Preferred-/-
...................................................... BRZL 265,700,000 3,056,310 1.0
------------
27,179,014
------------
Consumer Non-Durables (8.3%)
Companhia Cervejaria Brahma Preferred .................. BRZL 25,640,000 9,786,667 3.1
BEVERAGES - ALCOHOLIC
Embotelladora Andina S.A. - ADR{\/} .................... CHLE 238,100 7,916,825 2.5
BEVERAGES - NON ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred .............. BRZL 9,921,300 3,095,569 1.0
TEXTILES & APPAREL
Grupo Modelo S.A. "C" .................................. MEX 744,000 2,831,798 0.9
BEVERAGES - ALCOHOLIC
Compania Nacional de Chocolates S.A.-/- ................ COL 207,700 1,655,934 0.5
FOOD
Jugos Del Valle S.A. "B"-/- ............................ MEX 550,000 956,320 0.3
BEVERAGES - NON ALCOHOLIC
------------
26,243,113
------------
Capital Goods (1.9%)
Bufete Industrial, S.A. de C.V. - ADR-/- {\/} .......... MEX 454,900 6,084,288 1.9
CONSTRUCTION
------------ -----
TOTAL EQUITY INVESTMENTS (cost $317,060,467) ............ 292,124,469 92.0
------------ -----
<CAPTION>
No. of Market % of Net
Rights (0.0%) Country Rights Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Companhia Energetica de Minas Gerais (CEMIG) Rights,
expire 11/24/95 (cost $0)-/- .......................... BRZL 7,009,278 -- --
------------ -----
ELECTRICAL & GAS UTILITIES
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (1.8%)
Mexico (1.8%)
Mexican Tesobonos, effective yield 15.53%, due
11/30/95 (cost $5,630,523) .......................... USD 5,700,000 5,630,523 1.8
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield
of 5.80%, collateralized by $36,945,000 U.S. Treasury
Strips, due 2/15/02 (market value of collateral is
$25,568,464). (cost $24,760,989) ..................... $ 24,760,989 7.8
------------ -----
TOTAL INVESTMENTS (cost $347,451,979) .................... 322,515,981 101.6
Other Assets and Liabilities ............................. (5,158,417) (1.6)
------------ -----
NET ASSETS ............................................... $317,357,564 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $317,357,564.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{::} See Note 7 of Notes to Financial Statements.
{.} 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.
* For Federal income tax purposes, cost is $353,457,428 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 25,131,541
Unrealized depreciation: (56,072,988)
-------------
Net unrealized appreciation: $ (30,941,447)
-------------
-------------
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) ................. 3.6 3.6
Bolivia (BOL/BOL) .................... 2.3 2.3
Brazil (BRZL/BRL) .................... 32.0 32.0
Chile (CHLE/CLP) ..................... 16.7 16.7
Colombia (COL/COP) ................... 1.9 1.9
Ecuador (ECDR/ECS) .................. 1.1 1.1
Mexico (MEX/MXN) ..................... 27.9 1.8 29.7
Peru (PERU/PES) ...................... 4.2 4.2
United States (US/USD) ............... 0.0 6.2 6.2
Venezuela (VENZ/VEB) ................. 2.3 2.3
------ --- -----
Total ............................... 92.0 8.0 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $317,357,564.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $347,451,979)
(Note 1).................................................. $322,515,981
U.S. currency.............................. $ 422 --
Foreign currencies (cost $11,843,274)...... 11,321,619 11,322,041
-----------
Receivable for securities sold............................. 7,089,391
Receivable for Fund shares sold............................ 2,023,413
Dividends receivable....................................... 933,861
Miscellaneous receivable................................... 240,317
Unamortized organizational costs (Note 1).................. 16,576
------------
Total assets............................................. 344,141,580
------------
Liabilities:
Payable for Fund shares repurchased........................ 25,098,291
Payable for securities purchased........................... 879,083
Payable for investment management and administration fees
(Note 2).................................................. 286,790
Payable for service and distribution expenses (Note 2)..... 208,970
Payable for transfer agent fees (Note 2)................... 128,073
Payable for printing and postage expenses.................. 78,359
Payable for professional fees.............................. 33,261
Payable for custodian fees................................. 26,932
Payable for registration and filing fees................... 22,059
Payable for fund accounting fees (Note 2).................. 7,416
Payable for Directors' fees and expenses (Note 2).......... 3,354
Other accrued expenses..................................... 11,428
------------
Total liabilities........................................ 26,784,016
------------
Net assets................................................... $317,357,564
------------
------------
Class A:
Net asset value and redemption price per share
($182,461,796 DIVIDED BY 11,864,279 shares outstanding)..... $ 15.38
------------
------------
Maximum offering price per share
(100/95.25 of $15.38) *..................................... $ 16.15
------------
------------
Class B:+
Net asset value and offering price per share
($134,527,018 DIVIDED BY 8,842,965 shares outstanding)...... $ 15.21
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share
($368,750 DIVIDED BY 23,940 shares outstanding)............. $ 15.40
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................... $440,895,860
Undistributed net investment income........................ 1,356,776
Accumulated net realized loss on investments and foreign
currency transactions..................................... (99,318,624)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies......................... (640,450)
Net unrealized depreciation of investments................. (24,935,998)
------------
Total -- representing net assets applicable to capital shares
outstanding................................................. $317,357,564
------------
------------
<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 46
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$514,492).................................................. $ 7,388,772
Interest income............................................. 4,558,049
-------------
Total investment income................................... 11,946,821
-------------
Expenses:
Investment management and administration fees (Note 2)...... 3,913,429
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,189,722
Class B.................................. 1,632,783 2,822,505
------------
Transfer agent fees (Note 2)................................ 1,713,500
Custodian fees.............................................. 299,977
Printing and postage expenses............................... 183,720
Registration and filing fees................................ 147,250
Fund accounting fees (Note 2)............................... 101,476
Audit fees.................................................. 39,700
Amortization of organization costs (Note 1)................. 35,559
Legal fees.................................................. 30,150
Directors' fees and expenses (Note 2)....................... 18,450
Insurance expenses.......................................... 6,878
Other expenses.............................................. 4,496
-------------
Total expenses before reductions.......................... 9,317,090
-------------
Expense reductions (Note 6)............................. (21,159)
-------------
Total net expenses........................................ 9,295,931
-------------
Net investment income......................................... 2,650,890
-------------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... (98,358,686)
Net realized loss on foreign currency
transactions.............................. (513,916)
------------
Net realized loss during the year......................... (98,872,602)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (795,171)
Net change in unrealized depreciation of
investments............................... (97,151,861)
------------
Net unrealized depreciation during the year............... (97,947,032)
-------------
Net realized and unrealized loss on investments and foreign
currencies................................................... (196,819,634)
-------------
Net decrease in net assets resulting from operations.......... $(194,168,744)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)............... $ 2,650,890 $ (1,702,002)
Net realized gain (loss) on investments and
foreign currency transactions............. (98,872,602) 36,455,773
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... (795,171) 624,742
Net change in unrealized appreciation
(depreciation) of investments............. (97,151,861) 42,935,159
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (194,168,744) 78,313,672
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. -- (1,602,016)
From net realized gain on investments...... (19,567,238) (1,208,111)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. -- (278,582)
From net realized gain on investments...... (14,468,347) (226,277)
----------------- -----------------
Total distributions...................... (34,035,585) (3,314,986)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,098,477,187 1,159,589,487
Decrease from capital shares repurchased... (1,101,548,404) (828,810,299)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (3,071,217) 330,779,188
----------------- -----------------
Total increase (decrease) in net assets...... (231,275,546) 405,777,874
Net assets:
Beginning of year.......................... 548,633,110 142,855,236
----------------- -----------------
End of year................................ $ 317,357,564 $ 548,633,110
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------
AUGUST 13, 1991
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
--------------------------------------------------- OCTOBER 31,
1995(A) 1994(A) 1993(A) 1992 1991
---------- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 26.11 $ 19.78 $ 15.59 $ 16.45 $ 14.29
---------- ----------- ----------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... 0.15 (0.08) 0.18 0.25 0.01
Net realized and unrealized gain
(loss) on investments................ (9.28) 6.75 5.21 (0.98) 2.15
---------- ----------- ----------- ---------- -----------------
Net increase (decrease) from
investment operations.............. (9.13) 6.67 5.39 (0.73) 2.16
---------- ----------- ----------- ---------- -----------------
Distributions to shareholders:
From net investment income............ -- (0.19) (0.12) (0.13) --
From net realized gain on
investments.......................... (1.60) (0.15) (1.08) -- --
---------- ----------- ----------- ---------- -----------------
Total distributions................. (1.60) (0.34) (1.20) (0.13) --
---------- ----------- ----------- ---------- -----------------
Net asset value, end of period.......... $ 15.38 $ 26.11 $ 19.78 $ 15.59 $ 16.45
---------- ----------- ----------- ---------- -----------------
---------- ----------- ----------- ---------- -----------------
Total investment return (d)............. (37.16)% 34.10% 37.10% (4.50)% 15.10%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $182,462 $336,960 $129,280 $94,085 $125,038
Ratio of net investment income (loss) to
average net assets..................... 0.86% (0.29)% 1.30%* 1.30%* 1.20%*(c)
Ratio of expenses to average net assets:
With expense reductions (Note 6)...... 2.11% 2.04% 2.40%* 2.40%* 2.40%*(c)
Without expense reductions............ 2.12% --%** --%** --%** --%**
Portfolio turnover rate++++............. 125% 155% 112% 159% none
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02, $0.04 and $0.01 for the years ended
October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively. Without such reimbursements, the
expense ratios would have been 2.49%, 2.62% and 3.42% and the ratios
of net investment income to average net assets would have been 1.25%,
1.07% and 0.15% for the years ended October 31, 1993 and 1992 and for
the period from August 13, 1991 to October 31, 1991, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS B++ CLASS+++
----------------------------------------- -------------
APRIL 1, 1993 JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO TO
------------------------ OCTOBER 31, OCTOBER 31,
1995(A) 1994(A) 1993(A) 1995
---------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 25.94 $ 19.75 $ 16.26 $15.95
---------- ----------- -------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.06 (0.22) (0.07) 0.09
Net realized and unrealized gain
(loss) on investments................ (9.19) 6.74 3.56 (0.64)
---------- ----------- -------------- -------------
Net increase (decrease) from
investment operations.............. (9.13) 6.52 3.49 (0.55)
---------- ----------- -------------- -------------
Distributions to shareholders:
From net investment income............ -- (0.18) -- 0.00
From net realized gain on
investments.......................... (1.60) (0.15) -- 0.00
---------- ----------- -------------- -------------
Total distributions................. (1.60) (0.33) -- 0.00
---------- ----------- -------------- -------------
Net asset value, end of period.......... $ 15.21 $ 25.94 $ 19.75 $15.40
---------- ----------- -------------- -------------
---------- ----------- -------------- -------------
Total investment return (d)............. (37.42)% 33.33% 21.50%(b) (3.45)%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $134,527 $211,673 $13,576 $ 369
Ratio of net investment income (loss) to
average net assets..................... 0.36% (0.79)% (0.70)%(c) 1.36%(c)
Ratio of expenses to average net assets:
With expense reductions (Note 6)...... 2.61% 2.54% 2.90%(c) 1.61%(c)
Without expense reductions............ 2.62% --%** --%** 1.62%(c)
Portfolio turnover rate++++............. 125% 155% 112% 125%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02, $0.04 and $0.01 for the years ended
October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively. Without such reimbursements, the
expense ratios would have been 2.49%, 2.62% and 3.42% and the ratios
of net investment income to average net assets would have been 1.25%,
1.07% and 0.15% for the years ended October 31, 1993 and 1992 and for
the period from August 13, 1991 to October 31, 1991, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Latin America Growth Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records 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 Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
between the trade and settlement dates on securities transactions, and the
differences between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than investments
in securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities." 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
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the fund hold the underlying security
and, for a put, requires the Fund to maintain in a segregated account cash, U.S.
government securities, or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the stock or bond market and to fluctuations in currency values
or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed. The potential risk to the Fund is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Fund may use futures contracts to manage its
exposure to the stock or bond 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. Interest income is recorded on the
accrual basis. Where a high level of uncertainty exists as to its collection,
income is recorded net of all withholding tax with any rebate recorded when
received. The Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous prices.
(H) 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
$93,313,175 which expires in 2003.
(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 initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $177,793. These
expenses are being amortized on a straight line basis over a five-year period.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) 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.
(M) 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.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% of the first $500 million of average daily net assets of the
Fund; 0.95% of the next $500 million; 0.925% of the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, is the Fund's distributor. The Fund offers Class A, Class B and Advisor
Class shares for purchase.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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, 1995, G.T. Global retained
$291,788 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $60,973 for the year ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $699,275. 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%, 2.90%, and 1.90% of the average
net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $24,138 to G.T. Capital.
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, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$442,862,676 and $469,450,615. There were no purchases or sales of U.S.
government obligations for the year ended October 31, 1995.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
4. CAPITAL SHARES
At October 31, 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
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- ---------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 52,467,821 $ 904,752,193 33,720,715 $ 806,747,697
Shares issued in connection with reinvestment of
distributions.............................................. 673,780 16,139,240 111,943 2,416,821
----------- ------------- ------------ -------------
53,141,601 920,891,433 33,832,658 809,164,518
Shares repurchased........................................... (54,183,599) (943,221,637) (27,463,633) (659,239,270)
----------- ------------- ------------ -------------
Net increase (decrease)...................................... (1,041,998) $ (22,330,204) 6,369,025 $ 149,925,248
----------- ------------- ------------ -------------
----------- ------------- ------------ -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- ---------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 9,341,199 $ 166,467,703 14,675,635 $ 350,025,309
Shares issued in connection with reinvestment of
distributions.............................................. 439,250 10,440,947 18,533 399,660
----------- ------------- ------------ -------------
9,780,449 176,908,650 14,694,168 350,424,969
Shares repurchased........................................... (9,097,593) (158,042,884) (7,221,595) (169,571,029)
----------- ------------- ------------ -------------
Net increase................................................. 682,856 $ 18,865,766 7,472,573 $ 180,853,940
----------- ------------- ------------ -------------
----------- ------------- ------------ -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
ADVISOR CLASS SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 41,561 $ 677,104
Shares repurchased........................................... (17,621) (283,883)
----------- -------------
Net increase................................................. 23,940 $ 393,221
----------- -------------
----------- -------------
</TABLE>
5. WRITTEN OPTIONS:
The Fund's written options contract activity for the year ended October 31,
1995, was as follows:
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
--------- --------
<S> <C> <C>
Options outstanding at October 31, 1994.................................... 300 $66,750
Options written............................................................ 0 0
Options cancelled in closing purchase transactions......................... 0 0
Options expired prior to exercise.......................................... (300) (66,750 )
Options exercised.......................................................... 0 0
--- --------
Options outstanding at October 31, 1995.................................... 0 $ 0
--- --------
--- --------
</TABLE>
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $21,159 under these arrangements.
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $13,691,620,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- -------------------------------------------------------------------------------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia Electrica......................................... $7,532,161 $ -- $ -- $ 46,949
Dixie Toga...................................................................... 3,646,979 1,209,733 479,746 --
</TABLE>
8. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
The Fund's name, G.T. Latin America Growth Fund, will become "GT Global Latin
America Growth Fund."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$24,119,757 as capital gain dividends for the fiscal year ended October 31,
1995.
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.378 per share (representing an approximate total of
$7,571,282). The total amount of dividend & capital gain taxes paid by the Fund
to such countries was approximately $0.028 per share (representing an
approximate total of $554,423).
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns high monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL LATIN AMERICA GROWTH FUND, G.T. INVESTMENT FUNDS, INC. LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL INFORMATION
DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
LATSX602MC
<PAGE>
GT GLOBAL EMERGING MARKETS FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
GT Global Emerging Markets Fund ("Fund") is a diversified mutual fund organized
as a separate series of G.T. Investment Funds, Inc. ("Company"), a registered
open-end management investment company. This Statement of Additional Information
relating to the Advisor Class share of the Fund, which is not a prospectus,
supplements and should be read in conjunction with the Fund's current Advisor
Class Prospectus dated February 29, 1996. A copy of the Fund's Prospectus is
available without charge by writing to the above address or by calling the Fund
at the toll-free telephone number listed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT 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...................................................................................... 18
Directors and Executive Officers......................................................................................... 20
Management............................................................................................................... 22
Valuation of Fund Shares................................................................................................. 23
Information Relating to Sales and Redemptions............................................................................ 24
Taxes.................................................................................................................... 26
Additional Information................................................................................................... 28
Investment Results....................................................................................................... 29
Description of Debt Ratings.............................................................................................. 35
Financial Statements..................................................................................................... 37
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of capital. The Fund
seeks this objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies in emerging markets. The Fund
does not consider the following countries to be emerging markets: Australia,
Austria, Belgium, Canada, Denmark, England, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
and United States. The Fund normally may invest up to 35% of its assets in a
combination of (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not included in the list of emerging markets set forth in the Fund's
current Prospectus, if investing therein becomes feasible and desirable
subsequent to the date of the Fund's current Prospectus; and (iv) cash and money
market instruments.
In determining what countries constitute emerging markets, LGT Asset Management
will consider, among other things, data, analysis, and classification of
countries published or disseminated by the International Bank for Reconstruction
and Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF EQUITY INVESTMENTS
LGT Asset Management is the investment manager of the Fund. In determining the
appropriate distribution of investments among various countries and geographic
regions for the Fund, LGT Asset Management ordinarily considers the following
factors: prospects for relative economic growth between the different countries
in which the Fund may invest; expected levels of inflation; government policies
influencing business conditions; the outlook for currency relationships; and the
range of the individual investment opportunities available to international
investors.
In analyzing companies in emerging markets for investment by the Fund, LGT Asset
Management ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The
Securities and Exchange Commission ("SEC") has proposed a rule which, if
adopted, may permit the Fund to invest in certain of these securities subject to
certain restrictions. The proposed rule excepts from the prohibition of the 1940
Act any acquisition by an investment company of securities in related companies
provided that certain percentage limitations are adhered to. The Fund has
obtained an exemption from the SEC to permit the Fund to invest in a manner that
is consistent with the SEC's proposed rule.
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GT GLOBAL EMERGING MARKETS FUND
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities of
closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide, in part, that the Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in the aggregate more than 3 percent of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5 percent of its total assets invested in the investment company or
more than 10 percent of its total assets invested in the aggregate in all such
investment companies. Investment in such investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such funds unless, in the
judgment of LGT Asset Management, the potential benefits of such investments
justify the payment of any applicable premiums. The yield of such securities
will be reduced by operating expenses of such companies including payments to
the investment managers of those investment companies. At such time as direct
investment in these countries is allowed, the Fund anticipates investing
directly in these markets.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, the Fund may invest in
yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"),
and may invest in dollar-denominated bonds sold in the United States by non-U.S.
issuers ("Yankee bonds"). As compared with bonds issued in their countries of
domicile, such bond issues normally carry a higher interest rate but are less
actively traded. It is the policy of the Fund to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield. These bonds would be issued by governments which
are members of the Organization for Economic Cooperation and Development or have
AAA ratings.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs typically are issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally, ADRs and ADSs in
registered form are designed for use in United States securities markets and
EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not
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GT GLOBAL EMERGING MARKETS FUND
listed on the American or New York Stock Exchange. Warrants or rights acquired
by the Fund in units or attached to securities will be deemed to be without
value for purpose of this restriction. These limits are not fundamental policies
of the Fund and may be changed by vote of the Company's Board of Directors
without shareholder approval.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, the Fund intends to enter into repurchase
agreements only with banks and dealers believed by LGT Asset Management to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. LGT Asset Management will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from purchasing securities during times
when outstanding borrowings represent more than 5% of its assets. Nevertheless,
this policy may be changed in the future by vote of a majority of the Company's
Board of Directors. In the event that the Fund employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Fund's earnings or net asset value will increase faster than otherwise would
be the case; conversely, if such income and gains fail to exceed such costs, the
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase, the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage
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GT GLOBAL EMERGING MARKETS FUND
Association certificates or other securities together with a commitment (for
which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain in a segregated account with
a custodian cash, U.S. government securities or other liquid, high grade debt
securities in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund has a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are being lent, but it will call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Loans only will be made to
firms deemed by LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund also will be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
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GT GLOBAL EMERGING MARKETS FUND
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 LGT Asset
Management'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 LGT Asset Management 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 the Fund entered into a
short hedge because LGT Asset Management projected a decline in the price of
a security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of LGT Asset Management are not expected to make any major price moves
in the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the
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GT GLOBAL EMERGING MARKETS FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written. LGT Asset Management will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time 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 identical substantially to that of call options.
The Fund generally would write put options in circumstances where LGT Asset
Management wishes to purchase the underlying security or currency for the Fund's
portfolio at a price lower than the current market price of the security or
currency. In such event, the Fund would write a put option at an exercise price
that, reduced by the premium received on the option, reflects the lower price it
is willing to pay. Since the Fund would also receive interest on debt securities
or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
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GT GLOBAL EMERGING MARKETS FUND
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when LGT Asset
Management 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiratiaon date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL EMERGING MARKETS FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL EMERGING MARKETS FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collective "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
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GT GLOBAL EMERGING MARKETS FUND
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less value, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
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OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it
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GT GLOBAL EMERGING MARKETS FUND
matures. Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (I.E., cash) market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency the Fund is
obligated to deliver. The projection of short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which LGT Asset Management believes will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
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GT GLOBAL EMERGING MARKETS FUND
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash, U.S. government securities or other liquid,
high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property. Investing in the
securities of companies in emerging markets, including the markets of Latin
America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may
entail special risks relating to the potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility of currencies
into U.S. dollars and on repatriation of the capital invested. In the event of
such expropriation, nationalization or other confiscation by any country, the
Fund could lose its entire investment in any such country.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.
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GT GLOBAL EMERGING MARKETS FUND
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to LGT Asset Management, in accordance
with procedures approved by the Company's Board of Directors. LGT Asset
Management takes into account a number of factors in reaching liquidity
decisions, including, but not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security: (iii) the
number of dealers who have undertaken to make a market in the security; (iv) the
number of other potential purchasers; and (v) the nature of the security and how
trading is affected (e.g., the time needed to sell the security, how offers are
solicited and the mechanics of transfer). LGT Asset Management monitors the
liquidity of securities in the Fund's portfolio and periodically reports on such
decisions to the Board of Directors.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or may limit the investment by foreign persons to
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
only a specific class of securities of a company that may have less advantageous
terms than securities of the company available for purchase by nationals.
Moreover, the national policies of certain countries may restrict investment
opportunities in issuers or industries deemed sensitive to national interests.
In addition, some countries require governmental approval for the repatriation
of investment income, capital or the proceeds of securities sales by foreign
investors. In addition, if there is a deterioration in a country's balance of
payments or for other reasons, a country may impose restrictions on foreign
capital remittances abroad. The Fund could be adversely affected by delays in,
or a refusal to grant, any required governmental approval for repatriation, as
well as by the application to it of other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, LGT Asset Management will take appropriate
steps to evaluate the proposed investment, which may include on-site inspection
of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure information.
CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries, and the
U.S., and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
sell the security, could result in possible liability to the purchaser. LGT
Asset Management will consider such difficulties when determining the allocation
of the Fund's assets, although LGT Asset Management does not believe that such
difficulties will have a material adverse effect on the Fund's portfolio trading
activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
For purposes of concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Directors of the Fund, its
investment adviser, or distributor, each own beneficially more than 1/2 of
1% of the securities of such issuer and together own beneficially more than
5% of the securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation; or
(7) Invest more than 10% of its total assets in securities that are
restricted as to resale without registration under the 1933 Act.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, LGT Asset
Management is responsible for the execution of the Fund's portfolio transactions
and the selection of brokers and dealers who execute such transactions on behalf
of the Fund. In executing portfolio transactions, LGT Asset Management seeks the
best net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
Although LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, LGT Asset Management may select
brokers to execute the Fund's portfolio transactions on the basis of the
research and brokerage services they provide to LGT Asset Management for its use
in managing the Fund and its other advisory accounts. Such services may include
furnishing analyses, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such brokers are in addition to,
and not in lieu of, the services required to be performed by LGT Asset
Management under the Management Contract (defined below). A
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that LGT
Asset Management determines in good faith that such commission is reasonable in
terms either of that particular transaction or the overall responsibility of LGT
Asset Management to the Fund and its other clients and that the total
commissions paid by the Fund will be reasonable in relation to the benefits
received by the Fund over the long term. Research services may also be received
from dealers who execute Fund transactions.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by the Fund toward payment of the Fund's expenses, such
as transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
LGT Asset Management are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases LGT Asset
Management believes that coordination and the ability to participate in volume
transactions will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, LGT Asset Management may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which LGT
Asset Management serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and
broker/dealers than in the United States. Foreign security settlements may in
some instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest are generally traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of Liechtenstein Global Trust. The Company's Board of Directors has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to affiliates are reasonable and fair in the
context of the market in which they are operating. Any such transactions will be
effected and related compensation paid only in accordance with applicable SEC
regulations. For the fiscal years ended October 31, 1993, 1994 and 1995, the
Fund paid aggregate brokerage commissions of $2,361,620 $1,747,307 and
$3,307,402, respectively.
PORTFOLIO TRADING AND TURNOVER
The portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the Fund's average month-end portfolio
value, excluding short-term investments. For purposes of this calculation,
portfolio securities exclude purchases and sales of debt securities having a
maturity at the date of purchase of one year or less. The Fund engages in
portfolio trading when LGT Asset Management has concluded that the sale of a
security owned by the Fund and/or the purchase of another security of better
value can enhance principal and/or increase income. A security may be sold to
avoid any prospective decline in market value, or a security may be purchased in
anticipation of a market rise. Consistent with the Fund's investment objective,
a security also may be sold and a comparable security purchased coincidentally
in order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Although the Fund generally does not intend to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever LGT Asset Management
believes it is appropriate to do so, without regard to the length of time a
particular security may have been held. Portfolio turnover rate will not be a
limiting factor when management deems portfolio changes appropriate. Higher
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly, and may result in the
realization of net capital gains that are taxable when distributed to each
Fund's shareholders. For the fiscal years ended October 31, 1995 and 1994, the
Fund's portfolio turnover rates were 114% and 100%, respectively.
- --------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; President of the Asset Management Division, Liechtenstein Global
President Trust, since 1995; Director and President of LGT Asset Management Holdings, Inc. ("LGT
50 California Street Asset Management Holdings") since 1988; Director and President of LGT Asset Management
San Francisco, CA 94111 since 1989; Director of GT Global since 1987 and President of GT Global from 1987 to 1995;
Director of GT Services since 1990; President of GT Services from 1990 to 1995; Director
of G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and President of G.T.
Insurance from 1992 to 1995. Mr. Minella also is a director or trustee of each of the
other investment companies registered under the 1940 Act that is managed or administered
by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
</TABLE>
- ------------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Ms. Quigley was President of
Director Quigley Friedlander & Co., Inc. (a financial advisory services firm).
1055 California Street Ms. Quigley also is a director or trustee of each of the other
San Francisco, CA 94108 investment companies registered under the 1940 Act that is managed or
administered by LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989; Senior Vice
Vice President and Chief President, Chief Investment Officer - Global Equities and a Director of
Investment Officer - LGT Asset Management since 1987, and Chairman of the Investment Policy
Global Equities Committee of the affiliated international LGT companies since 1990.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 49 Senior Vice President, General Counsel of LGT Asset Management Holdings,
Vice President and Secretary LGT Asset Management, GT Global, G.T. Insurance and GT Services since
50 California Street February 1996. Senior Vice President, Secretary and General Counsel of
San Francisco, CA 94111 LGT Asset Management Holdings, LGT Asset Management, GT Global, GT
Services and G.T. Insurance from 1994 to February 1996. Mr. Lee was the
Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994. For more than five years prior
to October 1991, he was a shareholder in the law firm of Godfrey & Kahn,
S.C., Milwaukee, Wisconsin.
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995, Senior Vice
Vice President and President - Finance and Administration of GT Global, GT Services and
Chief Financial Officer G.T. Insurance. Senior Vice President - Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President - Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President - Finance of G.T. Insurance from 1992 to 1994; and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President -- Mutual Fund Accounting of LGT Asset Management since
Vice President and Principal 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company
Accounting Officer from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of G.T. Insurance since 1992 and Assistant General
San Francisco, CA 94111 Counsel of LGT Asset Management Holdings, LGT Asset Management, GT
Global and GT Services since 1991. From 1989 to 1991, Mr. Guarino was an
attorney at The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February 1996. Assistant
50 California Street General Counsel of LGT Asset Management since January 1995. From 1993 to
San Francisco, CA 94111 1994, Mr. Thelander was an associate at Kirkpatrick & Lockhart LLP (a
law firm). Prior thereto, he was an attorney with the U.S. Securities
and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors of the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee and
officer of G.T. Greater Europe Fund, Global High
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Income Portfolio, G.T. Global Variable Investment Trust, G.T. Global Variable
Investment Series and Global Investment Portfolio, which also are registered
investment companies managed by LGT Asset Management. Each Director and officer
serves in total as a Director and or Trustee and officer, respectively, of 10
registered investment companies with 40 series managed or administered by LGT
Asset Management. The Company pays each Director who is not a director, officer
or employee of LGT Asset Management or any affiliated company $5,000 per annum,
plus $300 per Fund for each meeting of the Board attended, and reimburses travel
and other expenses incurred in connection with attendance at such meetings.
Other Directors and officers receive no compensation or expense reimbursement
from the Company. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley, who are not directors, officers or
employees of LGT Asset Management or any affiliated company, received total
compensation of $36,705.30, $34,230.22, $36,755.58 and $33,706.85, respectively,
from the Company for their services as Directors. For the year ended October 31,
1995, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total
compensation of $92,176.78, $87,868.84, $92,280.90 and $86,957.55, respectively,
from the 40 GT Global Mutual Funds for which he or she serves as a Director or
Trustee. Fees and expenses disbursed to the Directors contained no accrued or
payable pension or retirement benefits. As of the date of Additional
Information, the officers and Directors and their families as a group owned in
the aggregate beneficially or of record less than 1% of the outstanding shares
of the Fund or of all the Company's funds in the aggregate.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
LGT Asset Management serves as the Fund's investment manager and administrator
under an Investment Management and Administration Contract ("Management
Contract") between the Company and LGT Asset Management. As investment manager
and administrator, LGT Asset Management makes all investment decisions for the
Fund and administers the Fund's affairs. Among other things, LGT Asset
Management furnishes the services and pays the compensation and travel expenses
of persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company and the Fund, and provides suitable office space,
necessary small office equipment and utilities. For these services, the Fund
pays LGT Asset Management investment management and administration fees, based
on the Fund's average daily net assets, computed daily and paid monthly at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million and .90% on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
LGT Asset Management 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, LGT Asset Management has agreed to reimburse the
Fund if the Fund's annual ordinary expenses exceed the most stringent expense
limitations prescribed by any state in which the Fund's shares are offered for
sale. Currently, the most restrictive applicable limitation provides that the
Fund's expenses may not exceed an annual rate of 2 1/2% of the first $30 million
of average net assets, 2% of the next $70 million of average net assets and
1 1/2% of assets in excess of that amount. Expenses which are not subject to
this limitation are interest, taxes, the amortization of organizational
expenses, payments of distribution fees, in part, certain expenses attributable
to investing outside the U.S. and extraordinary expenses. LGT Asset Management
and GT Global have undertaken to limit the Fund's Advisor Class share expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary items)
to the maximum annual level of 1.90% of the average daily net assets of the
Advisor Class shares of the Fund. For the fiscal years ended October 31, 1993,
1994 and 1995, the Fund paid investment management and administration fees to
LGT Asset Management in the amounts of $1,161,673, $4,702,869 and $5,410,744,
respectively.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Certain emerging market countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are offered through the Fund's principal
underwriter and distributor, GT Global, on a "best efforts" basis without a
sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent also is reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationery and office supplies.
LGT Asset Management serves as the Fund's pricing and accounting agent. The
monthly fee for these services to LGT Asset Management is a percentage, not to
exceed 0.03% annually, of the Fund's average daily net assets. The annual fee
rate is derived by applying 0.03% to the first $5 billion of assets of all
registered mutual funds advised by LGT Asset Management ("GT Global Mutual
Funds") and 0.02% to the assets in excess of $5 billion and allocating the
result according to each Fund's average daily net assets. As of October 31,
1995, the Fund paid LGT Asset Management fees of $33,216 for such accounting
services.
EXPENSES OF THE FUND
As described in the Prospectus, the Fund pays all of its own expenses not
assumed by other parties. These expenses include, in addition to the advisory
and brokerage fees discussed above, legal and audit expenses, custodian and
transfer agency and pricing and accounting fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized as series of the Company are allocated on a basis deemed
fair and equitable, which may be based on the relative net assets of the Fund or
the nature of the services performed and relative applicability to the Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
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VALUATION OF FUND SHARES
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As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the end of regular trading on The New York
Stock Exchange, Inc. ("NYSE") (currently at 4:00 p.m. Eastern time, unless
weather, equipment failure or other factors contribute to an earlier closing
time), on each Business Day as open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Funds' portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges, are valued at the last sale price on the exchange, or in the
principal over-the-counter market on which such securities are traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined by
LGT Asset Management to be the primary market. Securities and assets for which
market quotations are not readily available (including restricted securities
which are subject to limitations as to their sale) are valued at fair value as
determined in good faith by or under the direction of the Board of Directors.
Trading in securities on European and Far Eastern
Statement of Additional Information Page 23
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GT GLOBAL EMERGING MARKETS FUND
securities exchanges and over-the-counter markets is normally completed well
before the close of the business day in New York.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term investments are
amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. 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 LGT Asset Management on that day. When market
quotations for futures and options on futures held by the Fund are readily
available, those positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Securities trading in emerging markets may not take place on all days on which
the NYSE is open. Further, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days on which the NYSE is not open.
Consequently, the calculation of the Fund's net asset values therefore may not
take place contemporaneously with the determination of the prices of securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular trading on
the NYSE will not be reflected in the Fund's net asset value unless LGT Asset
Management, under the supervision of the Company's Board of Directors,
determines that the particular event would materially affect net asset value. As
a result, the Fund's net asset value may be significantly affected by such
trading on days when a shareholder cannot provide or redeem the Fund.
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INFORMATION RELATING TO SALES
AND REDEMPTIONS
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PAYMENT AND TERMS OF OFFERING
Payment of Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT 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 GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which make it not reasonably practicable for the
Fund to dispose of its portfolio securities or fairly to determine the value of
its assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. This election is irrevocable so long
as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
TAXES
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GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following, that
were held for less than three months -- options or Futures (other than those on
foreign currencies), or foreign currencies (or options, Futures or Forward
Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs, and other securities, with these other securities limited, in
respect of any one issuer, to an amount that does not exceed 5% of the value of
the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities; and (4) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
represents income from foreign sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received, on the
stock or of any gain from disposition of, stock of a PFIC (collectively "PFIC
income"), plus interest thereon, even if the Fund distributed the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to shareholders will apply. Distributions of net capital gain are not subject to
withholding, but in the case of a foreign shareholder who is a nonresident alien
individual, those distributions ordinarily will be subject to U.S. income tax at
a rate of 30% (or lower treaty rate) if the individual is physically present in
the United States for more than 182 days during the taxable year and the
distributions are attributable to a fixed place of business maintained by the
individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from foreign currencies (except certain gains that
may be excluded by future regulations), and gains from the disposition of
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all of those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign currency-denominated debt securities and options, Futures and Forward
Contracts and options on foreign currencies ("Section 988 gains" or loss). Each
Section 988 gain or loss generally is computed separately and treated as
ordinary income or loss. In the case of overlap between Sections 1256 and 988,
special provisions determine the character and timing of any income, gain or
loss. The Fund attempts to monitor Section 988 transactions to minimize any
adverse tax impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) in Tokyo; LGT
Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd.
located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Company and the Fund as to matters
of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" names and has reserved the right to withdraw its consent to the use of
such names by the Company and/or the Fund at any time, or to grant the use of
such names to any other company.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT RESULTS
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The Fund's "Standardized Return," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A, Class B and Advisor Class shares of the Fund, as
follows: Standardized Return ("T") is computed by using the value at the end of
the period ("EV") of a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the SEC:
P(1+T) to the (n)th power = EV. The following assumptions will be reflected in
computations made in accordance with this formula: (1) for Class A shares,
deduction of the maximum sales charge of 4.75% from $1,000 initial investment;
(2) for Class B shares, deferred sales charge imposed on a redemption of Class B
shares held for the period; (3) reinvestment of dividends and other
distributions at net asset value on the reinvestment date determined by the
Board; and (4) a complete redemption at the end of any period illustrated.
The Fund's Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................. (26.69)%
May 18, 1992 (commencement of operations) to October 31, 1995....................................... 6.31%
</TABLE>
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns for the periods shown,
were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................. (27.04)%
April 1, 1993 (commencement of operations) to October 31, 1995...................................... 8.60%
</TABLE>
The Fund's Standardized Returns for its Advisor Class shares, stated as average
annualized total returns, at October 31, 1995, was as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995....................................... (5.71)%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Fund may quote non-standardized total returns that do not reflect the effect of
sales charges. Non-Standardized Returns may be quoted from the same or different
time periods for which Standardized Returns are quoted.
The Fund's Non-Standardized Returns for Class A shares, stated as aggregate
total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- -------------------------------------------------------------------------------------------------- -----------------------
<S> <C>
Fiscal year ended October 31, 1995................................................................ (23.04)%
May 18, 1992 (commencement of operations) to October 31, 1995..................................... 29.70%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED RETURN
PERIOD AGGREGATE TOTAL RETURN
- ------------------------------------------------------------------------------------------------ -------------------------
<S> <C>
Fiscal year ended October 31, 1995.............................................................. (23.37)%
April 1, 1993 (commencement of operations) to October 31, 1995.................................. 26.77%
</TABLE>
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Fund's Non-Standardized Returns for its Advisor Class shares, stated as
aggregate total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- -------------------------------------------------------------------------------------------------- -----------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995..................................... (5.71)%
</TABLE>
The Fund's Non-Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- -------------------
<S> <C>
Fiscal year ended October 31, 1995................................................................... (23.04)%
May 18, 1992 (commencement of operations) to October 31, 1995........................................ 7.82%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Fiscal year ended October 31, 1995................................................................... (23.37)%
April 1, 1993 (commencement of operations) to October 31, 1995....................................... 9.61%
</TABLE>
The Fund's Non-Standardized Returns for its Advisor Class shares, stated as
average annualized total returns, at October 31, 1995, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
June 1, 1995 (commencement of operations) to October 31, 1995........................................ (5.71)%
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO EMERGING EQUITY AND BOND MARKETS
Information relating to foreign market performance, diversification and market
capitalization is based on sources believed to be reliable, but is neither
all-inclusive nor warranted as to accuracy by the Company or LGT Asset
Management. The authors and publishers of such material are not to be considered
as "experts" under the Securities Act of 1933 on account of the inclusion of
such information herein. Stocks chosen by Morgan Stanley Capital International
or the IFC for inclusion in its various international market indicies may not
necessarily constitute a representative cross-section of the particular markets.
GT Global believes that information relating to foreign market performance and
market capitalization may be useful to investors considering whether and to what
extent to diversify their investments through the purchase of mutual funds
investing in securities on a global basis. However, this data is not a
representation of the past performance of the Fund, nor is it a prediction of
such performance. The performance of the Fund will differ from the historical
performance of such indices. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. Moreover, the Fund is actively managed, i.e. LGT Asset Management
as the Fund's investment manager actively purchases and sells securities in
seeking the Fund's investment objective; this will cause the performance of the
Fund to differ from indices.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, 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 Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service or
BBB by Standard and Poor's, or, in the case of nonrated bonds, BBB by Fitch
Investors Service (excluding Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. 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.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger and/or other firms as
applicable, or to specific funds or groups of funds within or without such
peer group. Morningstar is a mutual fund rating service that also rates
mutual funds on the basis of risk-adjusted performance. Morningstar ratings
are calculated from a fund's three, five and ten year average annual returns
with appropriate fee adjustments and a risk factor that reflects fund
performance relative to the three-month U.S. Treasury bill monthly returns.
Ten percent of the funds in an investment category receive five stars and
22.5% receive four stars. The ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock markets in developing countries.
(14) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(15) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(16) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(17) Datastream and Worldscope an on-line database retrieval service for
information including but not limited to international financial and
economic data.
(18) International Financial Statistics, which is produced by the
International Monetary Fund.
(19) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(20) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(21) Various publications including but not limited to ratings agencies
such as Moody's Investors Service, Fitch Investors Service, Standard &
Poor's.
(22) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, 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, GT Global may
use performance rankings, ratings and commentary reported periodically in
national financial publications, included but not limited to, Money Magazine,
Smart Money, Global Finance, EuroMoney, Financial World, Forbes, Fortune,
Business Week, Latin Finance, the Wall Street Journal, Emerging Markets Weekly,
Kiplinger's Guide To Personal Finance, Barron's, The Financial Times, USA Today,
The New York Times, Far Eastern Economic Review, The Economist and Investors
Business Digest. Each Fund may compare its performance to that of other
compilations or indices of comparable quality to those listed above and other
indices which may be developed and made available.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and investors should consider the Fund as appropriate for a
portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global 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.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar,Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans of other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable you to
make pre-tax contributions. Because of their advantages, these retirement plans
may produce returns superior to comparable non-retirement investments. The Funds
may also discuss these plans which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 each
year to an IRA (or if less, 100% of compensation). If your spouse is not
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible roll-over distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified employee pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
401(K), PROFIT SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A 401(k) plan, a type of profit sharing plan, additionally
permits the eligible, participating employees to make pre-tax salary reduction
contributions to the plan (up to certain limitations).
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Funds and GT Global will quote certain data regarding
individual countries, regions, world stock exchanges, and economic and
demographic statistics from sources GT Global deems reliable, including but not
limited to, the economic and financial data of such financial organizations 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 Industry
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc. and
S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management, Inc.
18) Political and economic structure of countries: Economist Intelligence Unit.
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
21) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of LGT Asset Management provide any
assurance that the GT Global Mutual Funds' investment objectives will be
achieved.
THE LGT ADVANTAGE
With respect to LGT Global Emerging Markets Fund, LGT Asset Management has
developed a unique team approach to its emerging markets money management. LGT's
economists and strategists in Hong Kong determine the geographic allocation of
the Fund's assets according to each country's relative industrial development,
potential for productivity gains, and the likely impact of financial
liberalization. Then, portfolio managers in London, San Francisco, Hong Kong and
Singapore identify the individual securities that they believe have the
strongest long-term growth potential in each emerging market. Generally,
securities in Asia are selected by managers in Hong Kong; San Francisco-based
managers look for opportunities in Latin America; and European securities are
selected by London-based personnel.
For the other funds in the GT Global Mutual Funds, LGT Asset Management has
developed a unique team approach to its global money management which we call
the GT Advantage. LGT Asset Management's money management style combines the
best of the "top-down" and "bottom-up" investment manager strategies. The
top-down approach is implemented by LGT Asset Management's Investment Policy
Committee which sets broad guidelines for asset allocation and currency
management based on LGT Asset Management's own macroeconomic forecasts and
research from our worldwide offices. The bottom-up approach utilizes regional
teams of individual portfolio managers to implement the committee's guidelines
by selecting local securities that offer strong growth potential.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics: leading market positions
in well-established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issues rated
Prime-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Issuers rated Prime-3 have an acceptable ability for
repayment of senior short-term promissory obligations. The effect of industry
characteristics and market composition may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
STANDARD & POOR'S ("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.
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 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment grade ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Speculative grade ratings are as follows:
Ba -- These Bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reason unrelated to the quality of the
issue.
Should no rating be assigned, the reasons may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
Speculative grade ratings are as follows:
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-'rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on filing of a bankruptcy petition if debt service payments are
jeopardized.
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 the GT Global Emerging Markets Fund at
October 31, 1995 and for the fiscal year then ended appear on the following
pages.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Emerging Markets Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended and for the period from May 18, 1992 (commencement of operations) to
October 31, 1992. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Emerging Markets Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (30.4%)
HSBC Holdings PLC ......................................... HK 818,000 $ 11,903,073 2.5
BANKS-MONEY CENTER
Siam Commercial Bank PLC - Foreign ........................ THAI 949,600 11,096,280 2.3
BANKS-MONEY CENTER
Hang Seng Bank ............................................ HK 840,000 7,035,130 1.5
BANKS-MONEY CENTER
Land and House Co., Ltd. - Foreign ........................ THAI 383,400 6,186,820 1.3
REAL ESTATE
Commerce Asset Holding Bhd. ............................... MAL 1,244,000 6,169,809 1.3
BANKS-MONEY CENTER
State Bank of India Ltd.: ................................. IND -- -- 1.2
BANKS-REGIONAL
Common-/- ............................................... -- 500,500 3,082,258 --
New-/- .................................................. -- 467,050 2,876,261 --
Uniao Bancos Brasileiras "A" Preferred ................... BRZL 165,720,000 5,808,387 1.2
BANKS-MONEY CENTER
National Finance & Securities Public Co., Ltd. -
Foreign-/- ............................................... THAI 1,233,000 5,635,731 1.2
SECURITIES BROKER
City Developments Ltd. .................................... SING 884,000 5,476,106 1.1
REAL ESTATE
Samsung Securities Co., Ltd.-/- ........................... KOR 114,120 4,817,770 1.0
SECURITIES BROKER
Credit Bank of Athens .................................... GREC 80,000 4,813,457 1.0
BANKS-REGIONAL
Commercial Bank of Korea-/- ............................... KOR 403,350 4,495,842 0.9
BANKS-MONEY CENTER
Siam City Bank Ltd. - Foreign ............................. THAI 3,506,800 4,460,159 0.9
BANKS-REGIONAL
Amalgamated Banks of South Africa-/- ...................... SAFR 929,000 4,394,694 0.9
BANKS-REGIONAL
Malayan Banking Bhd. ...................................... MAL 530,000 4,276,717 0.9
BANKS-MONEY CENTER
Sun Hung Kai Properties Ltd. .............................. HK 505,000 4,033,494 0.8
REAL ESTATE
Banco Bradesco S.A. Preferred ............................. BRZL 437,192,750 4,001,348 0.8
BANKS-MONEY CENTER
Hong Kong Land Holdings Ltd.{\/} .......................... HK 2,080,000 3,744,000 0.8
REAL ESTATE INVESTMENT TRUST
Public Bank Bhd. - Foreign ................................ MAL 1,839,000 3,257,430 0.7
BANKS-MONEY CENTER
Industrial Finance Corporation of Thailand: ............... THAI -- -- 0.6
BANKS-MONEY CENTER
Local .................................................. -- 930,466 3,051,011 --
Foreign-/- .............................................. -- 32,534 106,679 --
Cho Hung Bank ............................................. KOR 211,000 3,049,999 0.6
BANKS-REGIONAL
Bank of Ayudhya Ltd. - Foreign ........................... THAI 503,500 2,901,729 0.6
BANKS-REGIONAL
Komercni Banka ............................................ CZCH 50,000 2,839,931 0.6
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Finance One Co., Ltd. - Foreign ........................... THAI 458,700 $ 2,825,855 0.6
SECURITIES BROKER
Land & General Bhd. ....................................... MAL 1,085,000 2,519,780 0.5
REAL ESTATE
Shin Young Securities Co.-/- .............................. KOR 98,800 2,453,535 0.5
SECURITIES BROKER
Hanshin Securities Co. .................................... KOR 109,700 2,451,797 0.5
SECURITIES BROKER
Housing Development Finance Corp.-/- ...................... IND 30,320 2,427,378 0.5
OTHER FINANCIAL
Daewoo Securities Co.-/- ................................. KOR 63,950 2,155,795 0.5
SECURITIES BROKER
Kookmin Bank-/- .......................................... KOR 101,000 2,144,286 0.4
BANKS-MONEY CENTER
Henderson Land Development Co., Ltd. ...................... HK 311,000 1,862,492 0.4
REAL ESTATE
General Finance & Securities Co., Ltd. - Foreign ......... THAI 397,100 1,767,695 0.4
SECURITIES BROKER
Seoul Bank-/- ............................................ KOR 168,500 1,620,912 0.3
BANKS-REGIONAL
Dhana Siam Finance & Securities Co., Ltd. - Foreign ....... THAI 308,600 1,484,126 0.3
SECURITIES BROKER
Banco Ganadero S.A. - ADR-/- {\/} ......................... COL 150,000 1,462,500 0.3
BANKS-REGIONAL
Banco Itau S.A. Preferred ................................. BRZL 2,970,000 880,343 0.2
BANKS-REGIONAL
Kookmin Bank-/- .......................................... KOR 27,768 589,530 0.1
BANKS-MONEY CENTER
Korea First Bank-/- ...................................... KOR 50,000 486,211 0.1
BANKS-REGIONAL
Banco LatinoAmericano de Exportaciones, S.A.
(Bladex){\/} ............................................. PAN 7,300 304,775 0.1
OTHER FINANCIAL
HDFC Bank Ltd. - Subscription Shares ..................... IND 500 499 --
BANKS-MONEY CENTER
------------
146,951,624
------------
Materials/Basic Industry (17.7%)
SA Iron & Steel Industrial Corp., Ltd. (ISCOR) ............ SAFR 14,797,200 15,014,299 3.1
METALS - STEEL
Cementos de Mexico S.A. "B" ............................... MEX 4,679,125 14,457,971 3.0
CEMENT
Sappi Ltd. ................................................ SAFR 684,900 12,959,852 2.7
FOREST PRODUCTS
Pohang Iron & Steel Co., Ltd. ............................. KOR 98,529 9,863,202 2.1
METALS - STEEL
Barlow Ltd. ............................................... SAFR 518,000 6,676,539 1.4
CEMENT
Companhia Vale do Rio Doce Preferred ...................... BRZL 34,200,000 5,513,261 1.2
METALS - NON-FERROUS
General Mining Union Corp. (Gencor) ....................... SAFR 1,440,400 5,056,114 1.1
METALS - NON-FERROUS
Kloof Gold Mining Co., Ltd. ............................... SAFR 474,800 4,492,143 0.9
GOLD
Indian Petrochemicals - GDR-/- {\/} ....................... IND 296,000 3,330,000 0.7
CHEMICALS
Ashanti Goldfields Co., Ltd. - GDR{\/} ................... SAFR 185,000 3,260,625 0.7
GOLD
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Paranapanema S.A. Min., Ind. E Construacao Preferred-/-.... BRZL 146,600,000 $ 1,686,319 0.4
METALS - NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 57,000 744,522 0.2
PAPER/PACKAGING
Associated Cement Cos., Ltd.-/- ........................... IND 8,460 707,067 0.1
CEMENT
Cementos Norte Pacasmayo S.A.-/- .......................... PERU 163,490 360,183 0.1
CEMENT
Dandot Cement Co. Ltd. .................................... PAK 140,770 98,740 --
CEMENT
Engro Chemicals Pakistan Ltd. ............................. PAK 3,252 12,926 --
CHEMICALS
------------
84,233,763
------------
Energy (10.6%)
Sasol Ltd. ................................................ SAFR 1,159,788 10,018,736 2.1
ENERGY SOURCE
Korea Electric Power Corp.-/- ............................. KOR 207,130 9,252,628 1.9
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{::} {\/} .......... BOL 291,700 8,495,763 1.8
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} .................................. CHLE 227,400 5,457,600 1.1
ELECTRICAL & GAS UTILITIES
Yukong Ltd. ............................................... KOR 129,842 4,887,531 1.0
OIL
C.A. La Electricidad de Caracas .......................... VENZ 5,503,255 3,655,521 0.8
ELECTRICAL & GAS UTILITIES
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 121,600 2,614,400 0.5
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A. - ADR-/- {\/} .............. ARG 100,000 1,700,000 0.4
ELECTRICAL & GAS UTILITIES
China Light & Power Co., Ltd. ............................. HK 230,000 1,225,683 0.3
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp. - ADR New{\/} .................. KOR 43,500 1,071,188 0.2
ELECTRICAL & GAS UTILITIES
Yukong Ltd. - New ........................................ KOR 15,558 568,067 0.1
OIL
Dragon Oil PLC-/- ......................................... UK 25,846,152 510,632 0.1
OIL
Polifin Ltd.-/- .......................................... SAFR 173,900 374,363 0.1
ENERGY SOURCE
Madras Refineries Ltd.-/- ................................. IND 199,500 348,101 0.1
OIL
Pakistan State Oil Co., Ltd. .............................. PAK 28,000 292,964 0.1
OIL
------------
50,473,177
------------
Consumer Non-Durables (10.6%)
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 450,000 12,318,750 2.6
BEVERAGES - NON ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 369,100 12,121,137 2.5
BEVERAGES - ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred ................. BRZL 24,740,000 7,719,189 1.6
TEXTILES & APPAREL
Hellenic Bottling Co. S.A. ................................ GREC 160,055 5,108,505 1.1
BEVERAGES - NON ALCOHOLIC
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Sun Brewing Ltd. - 144A GDR{.} {\/} ...................... TRKY 500,000 $ 4,750,000 1.0
BEVERAGES - ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 8,404,543 3,207,974 0.7
BEVERAGES - ALCOHOLIC
Embotelladora Andina S.A. - ADR{\/} ....................... CHLE 80,000 2,660,000 0.6
BEVERAGES - NON ALCOHOLIC
Dhan Fibres Ltd. ......................................... PAK 6,114,000 1,804,763 0.4
TEXTILES & APPAREL
Mahavir Spinning Mills Ltd.-/- ............................ IND 135,716 529,332 0.1
TEXTILES & APPAREL
Nishat Mills Ltd. ........................................ PAK 45,712 41,750 --
TEXTILES & APPAREL
Dewan Salman Fibre Ltd.-/- ................................ PAK 50 112 --
TEXTILES & APPAREL
------------
50,261,512
------------
Multi-Industry/Miscellaneous (8.9%)
Malbak Ltd. ............................................... SAFR 1,600,000 10,640,340 2.2
CONGLOMERATE
Hutchison Whampoa ......................................... HK 1,857,000 10,232,331 2.1
CONGLOMERATE
Grupo Carso S.A. de C.V. .................................. MEX -- -- 2.1
CONGLOMERATE
"A1"-/- ................................................. -- 1,829,000 9,581,699 --
"A1" 144A ADR{.} -/- {\/} ............................... -- 24,600 255,225 --
Renong Bhd. .............................................. MAL 3,320,000 5,070,498 1.1
MULTI-INDUSTRY
BPL Ltd.-/- ............................................... IND 648,700 1,655,041 0.3
MISCELLANEOUS
KEC International Ltd.-/- ................................. IND 481,500 1,581,466 0.3
MISCELLANEOUS
Koc Holding AS-/- ......................................... AUSL 6,838,200 1,366,573 0.3
CONGLOMERATE
Swire Pacific Ltd. "A" .................................... HK 159,000 1,192,829 0.2
MULTI-INDUSTRY
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 29,500 1,179,097 0.2
MISCELLANEOUS
Nicholas Piramel India Ltd.-/- ........................... IND 80,000 574,780 0.1
MISCELLANEOUS
Grasim Industries Ltd.-/- ................................. IND 6,500 114,751 --
MISCELLANEOUS
------------
43,444,630
------------
Services (5.7%)
Resorts World Bhd. ........................................ MAL 1,276,000 6,228,065 1.3
LEISURE & TOURISM
Pakistan Telecommunications Co., Ltd. - 144A GDR{.} -/- {\/
} ....................................................... PAK 59,733 5,585,036 1.2
TELEPHONE NETWORKS
Daewoo Corp.-/- ........................................... KOR 329,500 4,565,024 1.0
WHOLESALE & INTERNATIONAL TRADE
Berjaya Sports Toto Bhd. .................................. MAL 1,577,000 3,289,943 0.7
CONSUMER SERVICES
McCarthy Retail Ltd.-/- ................................... SAFR 687,100 2,882,937 0.6
RETAILERS-OTHER
CPT Telefonica De Peru "B" ................................ PERU 1,185,952 2,120,576 0.4
TELEPHONE NETWORKS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Grupo Televisa, S.A. de C.V. - GDR{\/} .................... MEX 47,200 $ 808,300 0.2
BROADCASTING & PUBLISHING
Gran Cadena de Almacenes Colombianos S.A. ................. COL 460,000 516,673 0.1
RETAILERS-OTHER
Keppel Philippine Holding "B"-/- ......................... PHIL 925,661 427,557 0.1
TRANSPORTATION - SHIPPING
Dusit Thani PLC - Foreign-/- .............................. THAI 259,747 402,628 0.1
LEISURE & TOURISM
Indian Hotels Co., Ltd.-/- ................................ IND 3,000 48,387 --
LEISURE & TOURISM
------------
26,875,126
------------
Capital Goods (5.0%)
Hindalco Industries Ltd. - GDR{.} -/- {\/} ................ IND 210,000 6,594,000 1.4
INDUSTRIAL COMPONENTS
Tata Engineering and Locomotive Co., Ltd. ................. IND 450,860 5,487,006 1.1
MACHINERY & ENGINEERING
Delta Electrical Industries Ltd. .......................... ZBBW 3,500,000 5,380,259 1.1
ELECTRICAL PLANT/EQUIPMENT
Murray & Roberts Holdings Ltd. ............................ SAFR 445,000 3,111,888 0.6
CONSTRUCTION
Netas Telekomunik-/- ...................................... TRKY 7,060,020 2,443,271 0.5
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- .............................. IND 1,600,000 1,219,941 0.3
TELECOM EQUIPMENT
------------
24,236,365
------------
Consumer Durables (3.7%)
Samsung Electronics Co.: .................................. KOR -- -- 2.9
CONSUMER ELECTRONICS
Common-/- ............................................... -- 37,601 8,421,523 --
New-/- .................................................. -- 21,021 4,566,846 --
New 2-/- ................................................ -- 727 157,942 --
Tofas Turk Otomobil Fabrikasi - GDR-/- {\/} ............... TRKY 3,444,720 2,583,540 0.5
AUTOMOBILES
Brasmotor S.A. Preferred .................................. BRZL 7,910,000 1,851,014 0.4
APPLIANCES & HOUSEHOLD
------------
17,580,865
------------
Technology (1.1%)
SPT Telecom-/- ........................................... CZCH 50,000 4,924,460 1.0
TELECOM TECHNOLOGY
Himachal Telematics Ltd.-/- ............................... IND 750,000 670,821 0.1
TELECOM TECHNOLOGY
------------
5,595,281
------------
Health Care (0.9%)
Ranbaxy Laboratories Ltd.-/- .............................. IND 225,200 4,253,044 0.9
MEDICAL TECHNOLOGY & SUPPLIES
Core Healthcare-/- ........................................ IND 29,400 116,393 --
PHARMACEUTICALS
------------
4,369,437
------------ -----
TOTAL EQUITY INVESTMENTS (cost $456,709,363) ................ 454,021,780 94.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (1.1%)
Argentina (1.1%)
Republic of Argentina, Par Bond, 5.25% due 3/31/23=/=
(cost $5,784,037) ...................................... USD 11,250,000 $ 5,371,875 1.1
------------
Corporate Bonds (0.2%)
India (0.1%)
Mahavir Spinning Mills Ltd., Convertible Bond, 14%
2/22/02 ................................................ INR 6,785,800 188,789 0.1
Korea (0.1%)
Yukong Ltd., 1% due 12/31/98 ............................ CHF 500,000 478,016 0.1
------------
Total Corporate Bonds (cost $1,021,985) ..................... 666,805
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $6,806,022) ............ 6,038,680 1.3
------------ -----
<CAPTION>
No. of Market % of Net
Warrants (0.2%) Country Warrants Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Tata Engineering & Locomotive Co. Ltd. Warrants, expire
3/8/96-/- {\/} ........................................... IND 142,500 819,375 0.2
AUTOMOBILES
National Finance & Securities Public Co., Ltd. Warrants,
expire 11/15/99-/- ....................................... THAI 411,000 245,032 --
SECURITIES BROKER
Securities One Ltd. Warrants, expire 9/16/00-/- .......... THAI 20,883 8,300 --
WARRANTS
Dragon Oil PLC Warrants, expire 11/1/99-/- ................ UK 923,076 7,295 --
OIL
------------ -----
TOTAL WARRANTS (cost $437,850) .............................. 1,080,002 0.2
------------ -----
<CAPTION>
No. of Market % of Net
Rights (0.0%) Country Rights Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Dewan Salmon Fibre Ltd. Rights, expire 12/31/95-/- ........ PAK 15,000 -- --
TEXTILES & APPAREL
SCF Finance & Securities Co., Ltd. Rights, expire
12/31/95-/- .............................................. THAI 43,842 -- --
BANKS-MONEY CENTER
Siam City Finance & Securities Co., Ltd. Rights, expire
12/31/95-/- .............................................. THAI 34,816 -- --
BANKS-MONEY CENTER
------------ -----
TOTAL RIGHTS (cost $0) ..................................... -- --
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (2.8%)
Mexico (2.8%)
Mexican Cetes: .......................................... MXN -- -- 2.8
Effective yield 45.15%, due 8/22/96 ................... -- 33,500,000 $ 3,434,315 --
Effective yield 45.14%, due 10/3/96 ................... -- 33,180,330 3,275,998 --
Effective yield 45.14%, due 9/19/96 ................... -- 23,500,000 2,349,142 --
Effective yield 45.15%, due 8/29/96 ................... -- 20,707,860 2,109,439 --
Effective yield 45.15%, due 9/5/96 .................... -- 11,100,000 1,123,594 --
Effective yield 45.16%, due 8/15/96 ................... -- 7,084,500 730,947 --
Effective yield 45.14%, due 9/26/96 ................... -- 5,028,570 499,559 --
------------
Total Treasury Bills (cost $15,393,816) ..................... 13,522,994
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $15,393,816) ............. 13,522,994 2.8
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995 for an effective yield of
5.80% collateralized by $7,860,000, U.S. Treasury Strips,
due 8/15/00 (market value of collateral is $8,947,104,
including accrued interest). (cost $8,771,413) .......... 8,771,413 1.8
------------ -----
TOTAL INVESTMENTS (cost $488,118,464) ...................... 483,434,869 100.7
Other Assets and Liabilities ................................ (3,442,182) (0.7)
------------ -----
NET ASSETS .................................................. $479,992,687 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $479,992,687.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} 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.
{::} See Note 5 of Notes to Financial Statements.
=/= The coupon rate shown on step-up coupon bond represents the rate at
period end.
* For Federal income tax purposes, cost is $489,840,394 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 53,173,590
Unrealized depreciation: (59,579,115)
-------------
Net unrealized depreciation: $ (6,405,525)
-------------
-------------
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 0.4 1.1 1.5
Australia (AUSL/AUD) ................. 0.3 0.3
Bolivia (BOL/BOL) .................... 1.8 1.8
Brazil (BRZL/BRL) .................... 6.5 6.5
Chile (CHLE/CLP) ..................... 2.2 2.2
Colombia (COL/COP) ................... 0.4 0.4
Czech Republic (CZCH/CSK) ........... 1.8 1.8
Greece (GREC/GRD) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 8.6 8.6
India (IND/INR) ...................... 7.2 0.3 7.5
Korea (KOR/KRW) ...................... 14.0 0.1 14.1
Malaysia (MAL/MYR) ................... 6.5 6.5
Mexico (MEX/MXN) ..................... 8.1 2.8 10.9
Pakistan (PAK/PKR) .................. 1.7 1.7
Panama (PAN/PND) ..................... 0.1 0.1
Peru (PERU/PES) ...................... 0.5 0.5
Philippines (PHIL/PHP) ............... 0.1 0.1
Singapore (SING/SGD) ................. 1.1 1.1
South Africa (S AFR/ZAR) ............. 18.9 18.9
Thailand (THAI/THB) .................. 8.3 8.3
Turkey (TRKY/TRL) .................... 2.0 2.0
United Kingdom (UK/GBP) .............. 0.1 0.1
United States (US/USD) ............... 1.1 1.1
Venezuela (VENZ/VEB) ................. 0.8 0.8
Zimbabwe (ZBBW/ZWD) .................. 1.1 1.1
------ --- --- -----
Total ............................... 94.6 1.5 3.9 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $479,992,687.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $488,118,464)
(Note 1)................................................. $483,434,869
U.S. currency.............................. $ 512 --
Foreign currencies (cost $5,032,122)....... 4,833,255 4,833,767
----------
Receivable for securities sold............................ 2,587,251
Dividends receivable...................................... 947,644
Receivable for Fund shares sold........................... 594,544
Interest receivable....................................... 272,508
Unamortized organizational costs (Note 1)................. 46,409
Cash held as collateral for securities loaned (Note 1).... 7,974,500
------------
Total assets............................................ 500,691,492
------------
Liabilities:
Payable for securities purchased.......................... 7,912,571
Payable for Fund shares repurchased....................... 3,724,139
Payable for investment management and administration fees
(Note 2)................................................. 415,732
Payable for service and distribution expenses (Note 2).... 309,997
Payable for transfer agent fees (Note 2).................. 150,596
Payable for printing and postage expenses................. 98,561
Payable for custodian fees (Note 1)....................... 36,517
Payable for professional fees............................. 31,623
Payable for registration and filing fees.................. 17,956
Payable for fund accounting fees (Note 2)................. 10,747
Payable for Directors' fees and expenses (Note 2)......... 4,399
Other accrued expenses.................................... 11,467
Collateral for securities loaned (Note 1)................. 7,974,500
------------
Total liabilities....................................... 20,698,805
------------
Net assets.................................................. $479,992,687
------------
------------
Class A:
Net asset value and redemption price per share
($252,456,916 DIVIDED BY 18,232,878 shares outstanding).... $ 13.85
------------
------------
Maximum offering price per share
(100/95.25 of $13.85) *.................................... $ 14.54
------------
------------
Class B:+
Net asset value and offering price per share
($225,860,627 DIVIDED BY 16,510,242 shares outstanding).... $ 13.68
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share
($1,675,144 DIVIDED BY 120,718 shares outstanding)......... $ 13.88
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................. $522,570,214
Undistributed net investment income....................... 40,513
Accumulated net realized loss on investments and foreign
currency transactions.................................... (37,564,716)
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies........................ (369,729)
Net unrealized depreciation of investments................ (4,683,595)
------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $479,992,687
------------
------------
<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 47
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$927,107)................................................... $ 9,668,900
Interest income.............................................. 7,101,959
-------------
Total investment income.................................... 16,770,859
-------------
Expenses:
Investment management and administration fees (Note 2)....... 5,410,744
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,518,742
Class B.................................. 2,519,288 4,038,030
-------------
Transfer agent fees (Note 2)................................. 1,961,000
Custodian fees (Note 1)...................................... 923,573
Printing and postage expenses................................ 323,393
Registration and filing fees................................. 201,785
Fund accounting fees (Note 1)................................ 140,645
Audit fees................................................... 49,130
Amortization of organization costs (Note 1).................. 29,985
Legal fees................................................... 29,325
Directors' fees and expenses (Note 2)........................ 20,610
Insurance expenses........................................... 8,104
-------------
Total expenses before reductions........................... 13,136,324
-------------
Expense reductions (Notes 1 & 6)......................... (80,993)
-------------
Total net expenses......................................... 13,055,331
-------------
Net investment income.......................................... 3,715,528
-------------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... (38,362,863)
Net realized loss on foreign currency
transactions.............................. (1,596,521)
-------------
Net realized loss during the year.......................... (39,959,384)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (337,162)
Net change in unrealized depreciation of
investments............................... (117,020,037)
-------------
Net unrealized depreciation during the year................ (117,357,199)
-------------
Net realized and unrealized loss on investments and foreign
currencies.................................................... (157,316,583)
-------------
Net decrease in net assets resulting from operations........... $(153,601,055)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)............... $ 3,715,528 $ (1,425,620)
Net realized gain (loss) on investments and
foreign currency transactions............. (39,959,384) 28,233,921
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... (337,162) 34,245
Net change in unrealized appreciation
(depreciation) of investments............. (117,020,037) 81,938,011
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (153,601,055) 108,780,557
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (15,193,744) (4,115,024)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (12,477,553) (1,126,597)
----------------- -----------------
Total distributions...................... (27,671,297) (5,241,621)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 550,507,913 883,196,940
Decrease from capital shares repurchased... (597,853,943) (498,150,727)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (47,346,030) 385,046,213
----------------- -----------------
Total increase (decrease) in net assets...... (228,618,382) 488,585,149
Net assets:
Beginning of year.......................... 708,611,069 220,025,920
----------------- -----------------
End of year................................ $ 479,992,687 $ 708,611,069
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and
supplemental data. This information has been derived from information provided
in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------
MAY 18, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
------------------------------------- TO OCTOBER 31,
1995(D) 1994 1993 1992
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.81 $ 14.42 $ 11.10 $ 11.43
----------- ----------- ----------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.13 (0.02) 0.02** 0.07**
Net realized and unrealized gain
(loss) on investments................ (4.32) 4.68 3.38 (0.40)
----------- ----------- ----------- ----------------
Net increase (decrease) from
investment operations.............. (4.19) 4.66 3.40 (0.33)
----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.01) (0.08) --
From net realized gain on
investments.......................... (0.77) (0.26) -- --
----------- ----------- ----------- ----------------
Total distributions................. (0.77) (0.27) (0.08) --
----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 13.85 $ 18.81 $ 14.42 $ 11.10
----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------------
Total investment return (c)............. (23.04)% 32.58% 30.90% (2.90)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 252,457 $ 417,322 $ 187,808 $ 84,558
Ratio of net investment income (loss) to
average net assets..................... 0.89% (0.11)% 0.1%** 1.7 %**(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.12% 2.06% 2.4%** 2.4 %**(b)
Without expense reductions............ 2.14% --%* --%* -- %*
Portfolio turnover rate++++............. 114% 100% 99% 32 %(b)
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993
were reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class
shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares
issued.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02 for the year ended October 31, 1993
and for the period from May 18, 1992 to October 31, 1992,
respectively. Without such reimbursements, the expense ratios
would have been 2.61% and 2.91% and the ratio of net investment
income to average net assets would have been 0.36% and 1.21% for
the year ended October 31, 1993 and for the period from May 18,
1992 to October 31, 1992, respectively (See Note 2).
*** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net
investment income to average net assets would have been (0.76%).
(See Note 2).
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and
supplemental data. This information has been derived from information provided
in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
--------------------------------------- CLASS+++
APRIL 1, -------------
YEAR ENDED 1993 JUNE 1, 1995
OCTOBER 31, TO TO
----------------------- OCTOBER 31, OCTOBER 31,
1995(D) 1994 1993 1995
---------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.68 $ 14.39 $ 11.47 $14.71
---------- ---------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.06 (0.12) 0.00*** 0.08
Net realized and unrealized gain
(loss) on investments................ (4.29) 4.67 2.92 (0.91)
---------- ---------- ------------- -------------
Net increase (decrease) from
investment operations.............. (4.23) 4.55 2.92 (0.83)
---------- ---------- ------------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- --
From net realized gain on
investments.......................... (0.77) (0.26) -- --
---------- ---------- ------------- -------------
Total distributions................. (0.77) (0.26) -- --
---------- ---------- ------------- -------------
Net asset value, end of period.......... $ 13.68 $ 18.68 $ 14.39 $13.88
---------- ---------- ------------- -------------
---------- ---------- ------------- -------------
Total investment return (c)............. (23.37)% 31.77% 25.50%(a) (5.71)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $225,861 $291,289 $32,318 $1,675
Ratio of net investment income (loss) to
average net assets..................... 0.39% (0.61)% (0.4)%***(b) 1.39%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.62% 2.56% 2.9%***(b) 1.62%(b)
Without expense reductions............ 2.64% --%* --%* 1.64%(b)
Portfolio turnover rate++++............. 114% 100% 99% 114%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993
were reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class
shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares
issued.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02 for the year ended October 31, 1993
and for the period from May 18, 1992 to October 31, 1992,
respectively. Without such reimbursements, the expense ratios
would have been 2.61% and 2.91% and the ratio of net investment
income to average net assets would have been 0.36% and 1.21% for
the year ended October 31, 1993 and for the period from May 18,
1992 to October 31, 1992, respectively (See Note 2).
*** Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net
investment income to average net assets would have been (0.76%).
(See Note 2).
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Emerging Markets Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records 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 Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or in the case of an over-the-counter option, is valued at the average of
the last bid prices obtained from brokers. 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 securities
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 Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund would
realize a gain or loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying security,
and the proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
"variation margin" and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed. The potential risk to the Fund is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Fund may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $7,467,563
were on loan to brokers. The loans were secured by cash collateral of $7,974,500
received by the Fund. For international securities, cash collateral is received
by the Fund against loaned securities in an amount at least equal to 105% of the
market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 103% of the market value of the
loaned securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1995, the Fund received fees of $64,388 which were
used to reduce the Fund's custodian fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$35,842,783 which expires in 2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $61,975. These expenses
are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(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.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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, 1995, G.T. Global retained
$230,239 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $56,294 for the period ended October 31, 1995. 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 CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $1,059,193. 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%, 2.90% and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by 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.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $33,216 to G.T. Capital.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$580,388,902 and $563,548,434, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year ended October 31, 1995.
4. CAPITAL SHARES
At October 31, 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
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. 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. 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. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold............................................................... 26,517,243 $ 389,593,563 31,738,988 $ 542,276,829
Shares issued in connection with reinvestment of distributions............ 788,804 13,204,560 224,680 3,671,269
----------- ------------- ----------- -------------
27,306,047 402,798,123 31,963,668 545,948,098
Shares repurchased........................................................ (31,260,135) (469,990,809) (22,802,389) (390,541,648)
----------- ------------- ----------- -------------
Net increase (decrease)................................................... (3,954,088) $ (67,192,686) 9,161,279 $ 155,406,450
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold............................................................... 9,004,842 $ 135,163,005 19,746,670 $ 336,338,827
Shares issued in connection with reinvestment of distributions............ 637,782 10,599,912 55,761 910,015
----------- ------------- ----------- -------------
9,642,624 145,762,917 19,802,431 337,248,842
Shares repurchased........................................................ (8,726,345) (127,721,360) (6,446,858) (107,609,079)
----------- ------------- ----------- -------------
Net increase.............................................................. 916,279 $ 18,041,557 13,355,573 $ 229,639,763
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31,
1995
--------------------------
SHARES AMOUNT
----------- -------------
<S> <C> <C> <C> <C>
ADVISOR CLASS:
Shares sold............................................................... 130,495 $ 1,946,873
Shares repurchased........................................................ (9,777) (141,774)
----------- -------------
Net increase.............................................................. 120,718 $ 1,805,099
----------- -------------
----------- -------------
</TABLE>
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $8,495,763,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ----------------------------------------------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviara de Energia Electrica...................................... $ -- $ -- $ -- $ 218,775
</TABLE>
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $16,605 under these arrangements.
7. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$17,505,694 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL EMERGING MARKETS FUND, G.T. INVESTMENT FUNDS, INC., LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL INFORMATION
DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
EXESX602
<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, 1995, and for the fiscal year then ended, for Class A and Class B of
the GT Global Income Funds (consisting of GT Global Strategic Income Fund, GT
Global Government Income Fund and GT Global High Income Fund), GT Global Theme
Funds (consisting of GT Global Telecommunications Fund, GT Global Health Care
Fund, GT Global Financial Services Fund, GT Global Infrastructure Fund, GT
Global Natural Resources Fund), GT Global Growth & Income Fund, GT Global
Emerging Markets Fund and GT Global Latin America Growth Fund, each a series of
Registrant, are included in the Funds' Statements of Additional Information and
are filed herewith:
-- Reports of Independent Accountants
-- Portfolios of Investments
-- Statements of Assets and Liabilities
-- Statements of Operations
-- Statements of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
The following audited financial statements as of October 31, 1995, and for
the period December 30, 1994 (commencement of operations) to October 31, 1995,
relating to Class A and Class B of GT Global Consumer Products and Services
Fund, a series of the Registrant, are included in Statement of Additional
Information for the GT Global Theme Funds, and are filed herewith:
-- Report of Independent Accountants
-- Portfolio of Investments
-- Statement of Assets and Liabilities
-- Statement of Operations
-- Statement of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
The following audited financial statements as of October 31, 1995, and for
the period June 1, 1995 (commencement of operations) to October 31, 1995, for
Advisor Class of the GT Global Income Funds (consisting of GT Global Strategic
Income Fund, GT Global Government Income Fund and GT Global High Income Fund),
GT Global Theme Funds (consisting of GT Global Telecommunications Fund, GT
Global Health Care Fund, GT Global Financial Services Fund, GT Global
Infrastructure Fund, GT Global Natural Resources Fund and GT Global Consumer
Products and Services Fund), GT Global Growth & Income Fund, GT Global Emerging
Markets Fund and GT Global Latin America Growth Fund, each a series of
Registrant, are included in the Funds' Statements of Additional Information and
are filed herewith:
-- Reports of Independent Accountants
-- Portfolios of Investments
-- Statements of Assets and Liabilities
-- Statements of Operations
-- Statements of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
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.(18)
(2) Registrant's By-Laws.(1)
(3) Not Applicable.
(4) Specimen copy of a share certificate.(1)
(5)(a) Investment Management and Administration Contract dated
April 19, 1989.(1)
(5)(b) Investment Management and Administration Contract Fee Letter
relating to:
(i) GT Global Growth & Income Fund(1)
(ii) GT Global Latin America Growth Fund and GT Global Small
Companies Fund(1)
(iii) GT Global Telecommunications Fund(1)
(iv) Withdrawn
(v) GT Global Emerging Markets Fund(3)
(5)(c) Administration Contract relating to:
(i) GT Global High Income Fund(8)
(ii) GT Global Infrastructure Fund(12)
(iii) GT Global Natural Resources Fund(12)
(iv) GT Global Financial Services Fund(12)
(v) Administration Contract Fee Letter relating to the GT
Global Consumer Products and Services Fund.(18)
(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 GT Global
Government Income Fund and GT Global Strategic Income Fund
(formerly G.T. Global Bond Fund).(2)
(10)(b) Opinion and consent of counsel relating to GT Global Health
Care Fund.(1)
(10)(c) Opinion and consent of counsel relating to GT Global Growth
& Income Fund.(2)
(10)(d) Opinion and consent of counsel relating to GT Global Latin
America Growth Fund and GT Global Small Companies Fund.(1)
(10)(e) Opinion and consent of counsel relating to GT Global
Telecommunications Fund.(1)
(10)(f) Opinion and consent of counsel relating to GT Global
Emerging Markets Fund.(3)
(10)(g) Opinion and consent of counsel relating to GT Global High
Income Fund.(7)
(10)(h) Opinion and consent of counsel relating to GT Global
Infrastructure Fund and GT Global Natural Resources
Fund.(13)
(10)(i) Opinion and consent of counsel relating to GT Global
Consumer Products and Services Fund and GT Global Financial
Services Fund.(16)
(11)(a) Consents of Coopers & Lybrand, Independent Accountants,
relating to:
(i) GT Global Government Income Fund -- Filed herewith.
(ii) GT Global Strategic Income Fund -- Filed herewith.
(iii) GT Global Health Care Fund -- Filed herewith.
(iv) GT Global Growth & Income Fund -- Filed herewith.
(v) GT Global Latin America Growth Fund -- Filed herewith.
(vi) Not Applicable
(vii) Not Applicable
(viii) GT Global Emerging Markets Fund -- Filed herewith.
(ix) GT Global Telecommunications Fund. -- Filed herewith
(x) GT Global High Income Fund -- Filed herewith.
(xi) GT Global Financial Services Fund. -- Filed herewith
(xii) GT Global Infrastructure Fund. -- Filed herewith
(xiii) GT Global Natural Resources Fund. -- Filed herewith
(xiv) GT Global Consumer Products and Services Fund. -- Filed
herewith
(12) Not Applicable.
(13) Not Applicable.
(14) Model retirement plan -- GT 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, Class B and Advisor Class shares of:
(i) GT Global Government Income Fund -- Filed herewith.
(ii) GT Global Strategic Income Fund -- Filed herewith.
(iii) GT Global Health Care Fund -- Filed herewith.
(iv) GT Global Growth & Income Fund -- Filed herewith.
(v) GT Global Latin America Growth Fund -- Filed herewith.
(vi) GT Global Telecommunications Fund -- Filed herewith.
(vii) GT Global Emerging Markets Fund -- Filed herewith.
(viii) GT Global High Income Fund -- Filed herewith.
(ix) GT Global Financial Services Fund -- Filed herewith.
(x) GT Global Infrastructure Fund -- Filed herewith.
(xi) GT Global Natural Resources Fund -- Filed herewith.
(xii) GT Global Consumer Products and Services Fund -- Filed
herewith.
(18) Multiple Class Plan adopted pursuant to Rule 18f-3 -- Filed
herewith.
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 for G.T. Investment Funds, Inc. and
Global Investment Portfolio.(18)
(d) Powers of Attorney for Helge K. Lee, Peter R. Guarino and
David J. Thelander for Global High Income Portfolio.(19)
- ------------------------
(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.
C-4
<PAGE>
(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.
(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. 42 to the Registration Statement on Form N-1A,
filed on June 30, 1995.
(19) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 43 to the Registration Statement on Form N-1A,
filed on December 29, 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 January 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF RECORD
TITLE OF CLASS HOLDERS
- ------------------------------------------------------------------------------------ ----------------
<S> <C>
Capital Stock, $.0001 par value, of:
GT Global Growth & Income Fund Class A........................................ 23,555
GT Global Growth & Income Fund Class B........................................ 32,084
GT Global Growth & Income Fund Advisor Class.................................. 99
GT Global Strategic Income Fund Class A....................................... 14,630
GT Global Strategic Income Fund Class B....................................... 26,783
GT Global Strategic Income Fund Advisor Class................................. 94
GT Global Government Income Fund Class A...................................... 22,212
GT Global Government Income Fund Class B...................................... 14,339
GT Global Government Income Fund Advisor Class................................ 56
GT Global High Income Fund Class A............................................ 8,331
GT Global High Income Fund Class B............................................ 14,438
GT Global High Income Fund Advisor Class...................................... 157
GT Global Health Care Fund Class A............................................ 43,788
GT Global Health Care Fund Class B............................................ 9,243
GT Global Health Care Fund Advisor Class...................................... 109
GT Global Latin America Growth Fund Class A................................... 30,826
GT Global Latin America Growth Fund Class B................................... 23,506
GT Global Latin America Growth Fund Advisor Class............................. 179
GT Global Telecommunications Fund Class A..................................... 141,328
GT Global Telecommunications Fund Class B..................................... 126,779
GT Global Telecommunications Fund Advisor Class............................... 237
GT Global Financial Services Fund Class A..................................... 845
GT Global Financial Services Fund Class B..................................... 870
GT Global Financial Services Fund Advisor Class............................... 17
GT Global Infrastructure Fund Class A......................................... 5,610
GT Global Infrastructure Fund Class B......................................... 6,942
GT Global Infrastructure Fund Advisor Class................................... 118
GT Global Natural Resources Fund Class A...................................... 1,825
GT Global Natural Resources Fund Class B...................................... 2,188
GT Global Natural Resources Fund Advisor Class................................ 45
GT Global Emerging Markets Fund Class A....................................... 36,847
GT Global Emerging Markets Fund Class B....................................... 37,602
GT Global Emerging Markets Fund Advisor Class................................. 295
GT Global Currency Fund....................................................... 1
GT Global Small Companies Fund................................................ 1
GT Global Consumer Products and Services Fund
Class A...................................................................... 1,017
GT Global Consumer Products and Services Fund
Class B...................................................................... 922
GT Global Consumer Products and Services Fund
Advisor Class................................................................ 102
</TABLE>
C-6
<PAGE>
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
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) GT Global, Inc. is also the principal underwriter for the following
other investment companies: G.T. Global Growth Series (which includes the
following funds: GT Global America Value Fund, GT Global America Small Cap
Growth Fund, GT Global America Growth Fund, GT Global Europe Growth Fund, GT
Global International Growth Fund, GT Global Japan Growth Fund, GT Global New
Pacific Growth Fund and GT Global Worldwide Growth Fund); G.T. Investment
Portfolios, Inc. (which includes one fund: GT Global Dollar Fund); G.T. Global
Variable Investment Series (which includes five funds in operation: GT Global
Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global Variable
America Fund, GT Global Variable International Fund and GT Global Money Market
Fund); and GT Global Variable Investment Trust (which includes seven funds in
operation: GT Global Variable Latin America Fund, GT Global Variable
Telecommunications Fund, GT Global Variable Growth & Income Fund, GT Global
Variable Strategic Income Fund, GT Global Variable Emerging Markets Fund, GT
Global Variable Global Government Income Fund and GT Global Variable U.S.
Government Income Fund).
C-7
<PAGE>
(b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed is 50
California Street, San Francisco, CA 94111.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
David A. Minella Chairman of the Board of Chairman of the Board of Directors
Directors and President
William J. Guilfoyle President and Director None
Helge K. Lee Senior Vice President and General Vice President and Secretary
Counsel
Raymond R. Cunningham Senior Vice President -- National None
Bank Sales and Director
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
David J. Thelander Vice President Assistant Secretary
Peter R. Guarino Secretary Assistant Secretary
David P. Anderson, Jr. Vice President None
1012 William
Plymouth, MI 48170
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Bruce W. Caldwell Vice President None
1003 Medinah Court
Kennesaw, GA 30144
Anthony DiBacco Vice President None
30585 Via Lindosa Way
Laguna Niguel, CA 92677
Stephen Donovick Vice President None
2806 Carriage Lane
Carrollton, TX 75006
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
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Ned E. Hammond Vice President None
8080 N. Central Expressway
Suite 400
Dallas, TX 75206
Campbell Judge Vice President None
4312 Linden Hills Blvd., #202
Minneapolis, MN 55410
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
C. David Matthews Vice President None
25804 Woodpath Trail
Westlake, OH 44145
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
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.
C-9
<PAGE>
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, LGT Asset Management,
Inc., 50 California Street, 27th Floor, San Francisco, California 94111.
Records covering stockholder accounts and portfolio transactions are also
maintained and kept by the Registrant's Transfer Agent, GT Global Investor
Services, Inc., 2121 N. California Boulevard, Suite 450, Walnut Creek, CA,
94596, and by the Registrant's Custodian, 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 Amendment 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 28th day of February, 1996.
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 February 28, 1996.
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/ DAVID J. THELANDER
-----------------------------------
David J. Thelander
Attorney-in-Fact, pursuant to
Power-of-Attorney previously filed
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 28th day of February, 1996.
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 February 28, 1996.
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/ DAVID J. THELANDER
-----------------------------------
David J. Thelander
Attorney-in-Fact, pursuant to
Power of Attorney previously filed
C-12
<PAGE>
SIGNATURES
Global High Income 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 28th day of February, 1996.
GLOBAL HIGH INCOME 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 February 28, 1996.
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/ DAVID J. THELANDER
-----------------------------------
David J. Thelander
Attorney-in-Fact, pursuant to
Power of Attorney previously filed
C-13
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.
GT Global Government Income Fund
GT Global Strategic Income Fund
GT Global High Income Fund
We consent to the inclusion in the Registration Statement of G.T. Investment
Funds, Inc. of our reports dated December 15, 1995 on the financial statements
of GT Global Government Income Fund, GT Global Strategic Income Fund, and GT
Global High Income Fund as of and for the year ended October 31, 1995. We also
consent to the references to our firm under the captions "Financial Highlights"
and "Independent Accountants" in such Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 27, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.
GT Global Growth & Income Fund:
We consent to the inclusion in the Registration Statement of G.T. Investment
Funds, Inc. of our report dated December 15, 1995 on the financial statements of
GT Global Growth & Income Fund as of and for the year ended October 31, 1995. We
also consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Accountants" in such Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 27, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.
GT Global Emerging Markets Fund
GT Global Latin America Fund
We consent to the inclusion in the Registration Statement of G.T. Investment
Funds, Inc. of our reports dated December 15, 1995 on the financial statements
of GT Global Emerging Markets Fund, and GT Global Latin America Fund as of and
for the year ended October 31, 1995. We also consent to the references to our
firm under the captions "Financial Highlights" and "Independent Accountants" in
such Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 27, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.
GT Global Financial Services Fund
GT Global Infrastructure Fund
GT Global Natural Resources Fund
GT Global Consumer Products and Services Fund
GT Global Health Care Fund
GT Global Telecommunications Fund
We consent to the inclusion in the Registration Statement of G.T. Investment
Funds, Inc. of our reports dated December 15, 1995 on the financial statements
of GT Global Financial Services Fund, GT Global Infrastructure Fund, GT Global
Natural Resources Fund, GT Global Consumer Products and Services Fund, GT Global
Health Care Fund, and GT Global Telecommunications Fund as of and for the year
ended October 31, 1995. We also consent to the references to our firm under the
captions "Financial Highlights" and "Independent Accountants" in such
Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 27, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
G.T. Investment Funds, Inc.:
Global High Income Portfolio
We consent to the inclusion in the Registration Statement of G.T.
Investment Funds, Inc. of our report dated December 15, 1995 on the financial
statements of Global High Income Portfolio as of and for the year ended
October 31, 1995. We also consent to the reference to our firm under the
captions "Financial Highlights" and "Independent Accountants" in such
Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P
Boston, Massachusetts
February 27, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
G.T. Investment Funds, Inc.:
Global Financial Services Portfolio
Global Infrastructure Portfolio
Global Natural Resources Portfolio
Global Consumer Products and Services Portfolio
We consent to the inclusion in the Registration Statement of our reports
dated December 15, 1995 on the financial statements of Global Financial
Services Portfolio, Global Infrastructure Portfolio, Global Natural Resources
Portfolio, and Global Consumer Products and Services Portfolio as of and for
the year ended October 31, 1995. We also consent to the reference to our firm
under the captions "Financial Highlights" and "Independent Accountants" in
such Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P
Boston, Massachusetts
February 27, 1996
<PAGE>
[For all equations contained within Exhibit 16, the symbol * will denote:
"raised to the power of"...]
EXHIBIT 16(I)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations and SEC Yield Quotation for the Class A
shares of the GT Global Government Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,040.32 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C>
$1,000 (1 + T)*1 = $1,040.32
(1 + T)*1 = $1,040.32/$1,000
1 + T = ($1,040.32/$1,000)*1
T = ($1,040.32/$1,000)*1 - 1
T = 0.0403
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (5)
ERV = ending redeemable value ($1,343.96, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5 = $1,343.96
(1 + T)*5 = $1,343.96/$1,000
1 + T = ($1,343.96/$1,000)*.2
T = ($1,343.96/$1,000)*.2 - 1
T = 0.0609
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2,772 DIVIDED BY 365 = 7.59)
VOA = ending value of account ($1,633.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*7.59 = $1,633.72
(1 + T)*7.59 = $1,633.72/$1,000
1 + T = ($1,633.72/$1,000)*.13
T = ($1,633.72/$1,000)*.13 - 1
T = 0.0668
</TABLE>
<PAGE>
EXHIBIT 16(I)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT INCOME FUND
CLASS A SHARES
STANDARDIZED RETURN
(CONTINUED)
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,633.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,633.72/$1,000) - 1
T = 0.6337
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,092.20, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,092.20
(1 + T)*1 = $1,092.20/$1,000
1 + T = ($1,092.20/$1,000)*1
T = ($1,092.20/$1,000)*1 - 1
T = 0.0922
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (5)
ERV = ending redeemable value ($1,411.09, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5 = $1,411.09
(1 + T)*5 = $1,411.09/$1,000
1 + T = ($1,411.09/$1,000)*.2
T = ($1,411.09/$1,000)*.2 - 1
T = 0.0713
</TABLE>
<PAGE>
EXHIBIT 16(I)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT INCOME FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
(CONTINUED)
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2,772 DIVIDED BY 365 = 7.59)
VOA = ending value of account ($1,570.40, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*7.59 = $1,715.19
(1 + T)*7.59 = $1,715.19/$1,000
1 + T = ($1,715.19/$1,000)*.13
T = ($1,715.19/$1,000)*.13 - 1
T = 0.0736
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,715.19, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,715.19/$1,000) - 1
T = 0.7152
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEC YIELD
Time period covered: month ended October 31, 1995
FORMULA:
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $2,594,116.82
b = expenses accrued for the period (net of reimbursements) = $114,617.91
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 44,938,703.33
d = maximum offering price per share on the last day of the period = $9.25
COMPUTATION:
YIELD = 2X((((2,594,116.82 - 114,617.91)/(44,938,703.33 X 9.25)) + 1)*6 - 1)
YIELD = 7.27%
<PAGE>
EXHIBIT 16(I)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return and SEC Yield quotations for the Class B shares of GT
Global Government Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,032.16 which assumes deduction of the maximum
5% contingent deferred sales charge on a $1,000 investment at the end of
the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,032.16
(1 + T)*1 = $1,032.16/$1,000
1 + T = ($1,032.16/$1,000)*1
T = ($1,032.16/$1,000)*1 - 1
T = 0.0322
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*1 = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,166.20 which assumes deduction of the
applicable 4% contingent deferred sales charge on a $1,000 investment at
the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,166.20
(1 + T)*3.02 = $1,166.20/$1,000
T + 1 = ($1,166.20/$1,000)*.33
T = ($1,166.20/$1,000)*.33 - 1
T = 0.0521
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,166.20 which assumes deduction of the
applicable 4% contingent deferred sales charge at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,166.20/$1,000) - 1
T = 0.1662
</TABLE>
<PAGE>
EXHIBIT 16(I)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT INCOME FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual total return
ERV = ending redeemable value ($1,082.16 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $1,082.16
(1 + T) = $1,082.16/$1,000
1 + T = ($1,082.16/$1,000)
T = ($1,082.16/$1,000) - 1
T = 0.0822
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,094.14 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,184.03
(1 + T)*3.02 = $1,184.03/$1,000
1 + T = ($1,184.03/$1,000)*.33
T = ($1,184.03/$1,000)*.33 - 1
T = 0.0574
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,184.03, which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,184.03/$1,000) - 1
T = 0.1840
</TABLE>
<PAGE>
EXHIBIT 16(I)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT INCOME FUND
CLASS B SHARES
SEC YIELD
Time period covered: month ended October 31, 1995
FORMULA:
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $1,555,536.72
b = expenses accrued for the period (net of reimbursements) = $299,706.29
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 26,928,708.52
d = maximum offering price per share on the last day of the period = $8.80
COMPUTATION:
YIELD = 2X((((1,555,536.72 - 299,706.29)/(26,928,708.52 X 8.80)) + 1)*6 - 1)
YIELD = 6.44%
<PAGE>
EXHIBIT 16(I)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GOVERNMENT INCOME FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Government Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,008.28 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,008.28/$1,000) - 1
T = 0.0083
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1,008.28, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,008.28/$1,000 - 1
T = 0.0083
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEC YIELD
Time period covered: month ended October 31, 1985
FORMULA:
YIELD = 2 X ((((a-b)/(cXd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $854.75
b = expenses accrued for the period (net of reimbursement) = $56.98
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 14,812.10
d = maximum offering price per share on the last day of the period = $8.80
COMPUTATION:
YIELD = 2 X ((((854.75 - 56.98) / (14,812.10 X 8.8)) + 1)*6 - 1)
YIELD = 7.46%
<PAGE>
EXHIBIT 16(II)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations and SEC Yield Quotation for the Class A
shares of the GT Global Strategic Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($981.63 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $981.63
(1 + T)*1 = $981.63/$1,000
1 + T = ($981.63/$1,000)*1
T = ($981.63/$1,000)*1 - 1
T = -0.0184
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (5)
ERV = ending redeemable value ($1,441.47, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5 = $1,441.47
(1 + T)*5 = $1,441.47/$1,000
1 + T = ($1,441.47/$1,000)*.2
T = ($1,441.47/$1,000)*.2 - 1
T = 0.0759
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2,772 DIVIDED BY 365 = 7.59)
VOA = ending value of account ($1,699.32 which assumes deduction of the maximum
sales charge of 4.75% on a $1,000 investment at the beginning of the
period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*7.59 = $1,699.89
(1 + T)*7.59 = $1,699.32/$1,000
1 + T = ($1,699.32/$1,000)*.13
T = ($1,699.32/$1,000)*.13 - 1
T = 0.0723
</TABLE>
<PAGE>
EXHIBIT 16(II)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
CLASS A SHARES
STANDARDIZED RETURN
(CONTINUED)
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,699.32, which assumes deduction of the maximum
4.75% sales charge on a $1,000 at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,699.32/$1,000) - 1
T = 0.6993
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,030.58, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,030.58
(1 + T)*1 = $1,030.58/$1,000
1 + T = ($1,030.58/$1,000)*1
T = ($1,030.58/$1,000)*1 - 1
T = 0.0306
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (5)
ERV = ending redeemable value ($1,513.38, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5 = $1,513.38
(1 + T)*5 = $1,513.38/$1,000
1 + T = ($1,513.38/$1,000)*.2
T = ($1,513.38/$1,000)*.2 - 1
T = 0.0864
</TABLE>
<PAGE>
EXHIBIT 16(II)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
(CONTINUED)
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2,772 DIVIDED BY 365 = 7.59)
VOA = ending value of account ($1,731.12, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*7.59 = $1,784.07
(1 + T)*7.59 = $1,784.07/$1,000
1 + T = ($1,784.07/$1,000)*.13
T = ($1,784.07/$1,000)*.13 1
T = 0.0792
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,784.07, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,784.07/$1,000) - 1
T = 0.7841
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEC YIELD
Time period covered: month ended October 31, 1995
FORMULA:
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $2,075,229.94
b = expenses accrued for the period (net of reimbursements) = $192,178.19
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 18,357,284.52
d = maximum offering price per share on the last day of the period = $10.84
COMPUTATION:
YIELD = 2X((((2,075,229.94 - 192,178.19) / (18,357,284.52 X 10.84)) + 1)*6 - 1)
YIELD = 11.63%
<PAGE>
EXHIBIT 16(II)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations and SEC Yield Quotation for the Class B
shares of the GT Global Strategic Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($977.37 which assumes deduction of the maximum 5%
contingent deferred sales charge on a $1,000 investment at the beginning
of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $977.37
(1 + T)*1 = $977.37/$1,000
1 + T = ($977.37/$1,000)*1
T = ($977.37/$1,000)*1 - 1
T = -0.0226
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,211.54 which assumes deduction of the
applicable 4% contingent deferred sales charge on a $1,000 investment at
the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,211.54
(1 + T)*3.02 = $1,211.54/$1,000
1 + T = ($1,211.54/$1,000)*.33
T = ($1,211.54/$1,000)*.33 - 1
T = 0.0655
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,211.54 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,211.54/$1,000) - 1
T = 0.2115
</TABLE>
<PAGE>
EXHIBIT 16(II)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual (aggregate) total return
n = number of years (1)
ERV = ending redeemable value ($1,024.85, which does not take the contingent
deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,024.85
(1 + T)*1 = $1,024.85/$1,000
1 + T = ($1,024.85/$1,000)*1
T = ($1,024.85/$1,000)*1 - 1
T = 0.0248
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,229.73, which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,229.73
(1 + T)*3.02 = $1,229.73/$1,000
1 + T = ($1,229.73/$1,000)*.33
T = ($1,229.73/$1,000)*.33 1
T = 0.0708
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,229.73, which does not take applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,229.73/$1,000) - 1
T = 0.2297
</TABLE>
<PAGE>
EXHIBIT 16(II)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
CLASS B SHARES
SEC YIELD
Time period covered: month ended October 31, 1995
FORMULA:
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $3,946,663.25
b = expenses accrued for the period (net of reimbursements) = $558,423.94
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 34,897,893.92
d = maximum offering price per share on the last day of the period = $10.33
COMPUTATION:
YIELD = 2X((((3,946,663.25 - 558,423.94) / (34,897,893.92 X 10.33))+1)*6 - 1)
YIELD = 11.55%
<PAGE>
EXHIBIT 16(II)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Strategic Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,037.20 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,037.20/$1,000) - 1
T = 0.0372
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,037.20, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,037.20/$1,000) - 1
T = 0.0372
</TABLE>
<PAGE>
EXHIBIT 16(II)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL STRATEGIC INCOME FUND
ADVISOR CLASS SHARES
SEC YIELD
Time period covered: month ended October 31, 1985
FORMULA:
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $4,835.05
b = expenses accrued for the period (net of reimbursements) = $321.52
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 42,769.87
d = maximum offering price per share on the last day of the period = $10.33
COMPUTATION:
YIELD = 2X(((4,835.05 - 321.52) / (42,769.87 X 10.33)+1)*6 - 1)
YIELD = 12.58%
<PAGE>
EXHIBIT 16(III)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HEALTH CARE FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A shares of the GT Global
Health Care Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,141.03 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,141.03
(1 + T)*1 = $1,141.03/$1,000
1 + T = ($1,141.03/$1,000)*1
T = ($1,141.03/$1,000)*1 - 1
T = 0.1410
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1,806.52 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5 = $1,806.52
(1 + T)*5 = ($1,806.52/$1,000)
1 + T = ($1,806.52/$1,000)*.2
T = ($1,806.52/$1,000)*.2 - 1
T = 0.1256
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 7, 1989 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2,276 DIVIDED BY 365 = 6.24)
VOA = ending value of account ($2,032.86 which assumes deduction of the maximum
sales charge of 4.75% on a $1,000 investment at the beginning of the
period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*6.24 = $2,032.86
(1 + T)*6.24 = $2,032.86/$1,000
1 + T = ($2,032.86/$1,000)*.2
T = ($2,032.86/$1,000)*.2 - 1
T = 0.1205
</TABLE>
<PAGE>
EXHIBIT 16(III)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HEALTH CARE FUND
CLASS A SHARES
STANDARDIZED RETURN
(CONTINUED)
Time period covered: August 7, 1989 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($2,032.86) which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($2,032.86/$1,000) - 1
T = 1.0329
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,197.93, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,197.93
(1 + T)*1 = $1,197.93/$1,000
1 + T = ($1,197.93/$1,000)*1
T = ($1,197.93/$1,000)*1 - 1
T = 0.1979
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1,896.87, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5 = $1,896.87
(1 + T)*5 = ($1,896.87/$1,000)
1 + T = ($1,896.87/$1,000)*.2
T = ($1,896.87/$1,000)*.2 - 1
T = 0.1366
</TABLE>
<PAGE>
EXHIBIT 16(III)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HEALTH CARE FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
(CONTINUED)
Time period covered: August 7, 1989 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2,276 DIVIDED BY 365 = 6.24)
VOA = ending value of account ($2,134.23, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*6.24 = $2,134.23
(1 + T)*6.24 = $2,134.23/$1,000
1 + T = ($2,134.23/$1,000)*.16
T = ($2,134.23/$1,000)*.16 - 1
T = 0.1293
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 7, 1989 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($2,134.23, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($2,134.23/$1,000) - 1
T = 1.1342
</TABLE>
<PAGE>
EXHIBIT 16(III)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HEALTH CARE FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B shares of the GT Global
Health Care Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1,141.74 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,141.74
(1 + T)*1 = ($1,141.74/$1,000)
1 + T = ($1,141.74/$1,000)*1
T = ($1,141.74/$1,000)*1 - 1
T = 0.1417
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,460.56 which assumes deduction of the maximum
4% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*2.58 = $1,460.56
(1 + T)*2.58 = ($1,460.56/$1,000)
1 + T = ($1,460.56/$1,000)*.39
T = ($1,460.56/$1,000)*.39 - 1
T = 0.1579
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,460.56 which assumes deduction of the maximum
4% contingent deferred sales charge on a $1,000 investment at the end of
period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,460.56/$1,000) - 1
T = 0.4606
</TABLE>
<PAGE>
EXHIBIT 16(III)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HEALTH CARE FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1,191.71 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,194.71
(1 + T)*1 = ($1,191.74/$1,000)
1 + T = ($1,191.74/$1,000)*1
T = ($1,191.74/$1,000)*1 - 1
T = 0.1917
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,490.56 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*2.58 = $1,490.56
(1 + T)*2.58 = ($1,490.56/$1,000)
1 + T = ($1,490.56/$1,000)*.39
T = ($1,490.56/$1,000)*.39 - 1
T = 0.1671
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,490.56, which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,490.56/$1,000) - 1
T = 0.4906
</TABLE>
<PAGE>
EXHIBIT 16(VII)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HEALTH CARE FUND
ADVISOR CLASS SHARES
The following is the schedules for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Heath Care Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,170.95 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,170.95/$1,000) - 1
T = 0.1710
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,170.95, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,170.95/$1,000) - 1
T = 0.1710
</TABLE>
<PAGE>
EXHIBIT 16(IV)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GROWTH & INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A shares of GT Global Growth &
Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,012.24 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,012.24
(1 + T)*1 = $1,012.24/$1,000
1 + T = ($1,012.24/$1,000)*1
T = ($1,012.24/$1,000)*1 - 1
T = 0.0122
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeemable value ($1,599.82 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*5 = $1,599.82
(T + 1)*5 = ($1,599.82/$1,000)
T + 1 = ($1,599.82/$1,000)*.2
T = ($1,599.82/$1,000)*.2 - 1
T = 0.0985
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,862 DIVIDED BY 365 = 5.10)
VOA = ending value of account ($1,603.13 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5.10 = $1,603.13
(1 + T)*5.10 = $1,603.13/$1,000
1 + T = ($1,603.13/$1,000)*.20
T = ($1,603.13/$1,000)*.20 - 1
T = 0.0969
</TABLE>
<PAGE>
EXHIBIT 16(IV)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GROWTH & INCOME FUND
CLASS A SHARES
STANDARDIZED RETURN
(CONTINUED)
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,603.13 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,603.13/$1,000) - 1
T = 0.6032
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual (aggregate) total return
ERV = ending redeemable value ($1,602.72 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $1,062.72
(1 + T) = $1,062.72/$1,000
1 + T = ($1,062.72/$1,000)
T = ($1,062.72/$1,000) - 1
T = 0.0627
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 31, 1990-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeemable value ($1,679.75 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*5 = $1,679.75
(T + 1)*5 = ($1,679.75/$1,000)
T + 1 = ($1,679.75/$1,000)*.2
T = ($1,679.75/$1,000)*.2 - 1
T = 0.1093
</TABLE>
<PAGE>
EXHIBIT 16(IV)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GROWTH & INCOME FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
(CONTINUED)
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,862 DIVIDED BY 365 = 5.10)
VOA = ending value of account ($1.683.13, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*5.10 = $1,683.13
(1 + T)*5.10 = $1,683.13/$1,000
1 + T = ($1,683.13/$1,000)*.20
T = ($1,683.13/$1,000)*.20 - 1
T = 0.1075
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,683.13, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,683.13/$1,000) - 1
T = 0.6831
</TABLE>
<PAGE>
EXHIBIT 16(IV)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GROWTH & INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B shares of GT Global Growth &
Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($1,005.74 which assumes deduction of the maximum
5% contingent deferred sales charge on a $1,000 investment at the end of
the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $1,005.74
(1 + T)*1 = $1,005.74/$1,000
1 + T = ($1,005.74/$1,000)*1
T = ($1,005.74/$1,000)*1 - 1
T = 0.0057
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 2.02)
VOA = ending value of account ($1,322.67 which assumes deduction of the
applicable 4% contingent deferred sales charge on a $1,000 investment at
the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,322.67
(1 + T)*3.02 = $1,322.67/$1,000
1 + T = ($1,322.67/$1,000)*.33
T = ($1,322.67/$1,000)*.33 - 1
T = 0.969
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,322.17, which assumes deduction of the
applicable 4% contingent deferred sales charge on a $1,000 investment at
the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,322.17/$1,000) - 1
T = 0.3227
</TABLE>
<PAGE>
EXHIBIT 16(IV)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GROWTH & INCOME FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual total return
ERV = ending redeemable value ($1,055.74 which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $1,055.74
(1 + T) = $1,055.74/$1,000
1 + T = ($1,055.74/$1,000)
T = ($1,055.74/$1,000) - 1
T = 0.0557
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,342.67, which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,342.67
(1 + T)*3.02 = $1,342.67/$1,000
1 + T = ($1,342.67/$1,000)*.33
T = ($1,342.67/$1,000)*.33 - 1
T = 0.1023
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,342.67, which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,342.67/$1,000) - 1
T = 0.3427
</TABLE>
<PAGE>
EXHIBIT 16(IV)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL GROWTH & INCOME FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Growth & Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1038.31 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = (1038.31/$1,000) - 1
T = 0.0383
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1038.31, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = (1038.31/$1,000) - 1
T = 0.0383
</TABLE>
<PAGE>
EXHIBIT 16(V)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL LATIN AMERICA GROWTH FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A shares of the GT Global Latin
America Growth Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($598.55 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $598.55
(1 + T)*1 = $598.55/$1,000
1 + T = ($598.55/$1,000)*1
T = ($598.55/$1,000)*1 - 1
T = -0.4015
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)-October 31,
1995
FORMULA: P(1 - T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1,540 DIVIDED BY 365 = 4.22)
ERV = ending redeemable value ($1,209.87 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*4.22 = $1,209.87
(1 + T)*4.22 = $1,209.87/$1,000
1 + T = ($1,209.87/$1,000)*.24
T = ($1,209.87/$1,000)*.24 - 1
T = 0.0462
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)-October 31,
1995
FORMULA: T (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,209.87 which assumed deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,209.87/$1,000) - 1
T = 0.2099
</TABLE>
<PAGE>
EXHIBIT 16(V)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL LATIN AMERICA GROWTH FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1.000
T = average annual total return
ERV = ending redeemable value ($628.40 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $628.40
(1 + T) = $628.40/$1,000
1 + T = ($628.40/$1,000)
T = ($628.40/$1,000) - 1
T = -0.3716
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,540 DIVIDED BY 365 = 4.22)
VOA = ending value of account ($1,270.21 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*4.22 = $1,270.21
(1 + T)*4.22 = $1,270.21/$1,000
1 + T = ($1,270.21/$1,000)*.24
T = ($1,270.21/$1,000)*.24 - 1
T = 0.0583
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,270.21 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,270.21/$1,000) - 1
T = 0.2702
</TABLE>
<PAGE>
EXHIBIT 16(V)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL LATIN AMERICA GROWTH FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B shares of the GT Global Latin
America Growth Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1,596.50 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $596.50
(T + 1)*1 = ($596.50/$1,000)
T + 1 = ($596.50/$1,000)*1
T = ($596.50/$1,000)*1 - 1
T = -0.4035
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($985.42 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*2.85 = $985.42
(T + 1)*2.58 = ($985.42/$1,000)
T + 1 = ($985.42/$1,000)*.39
T = ($985.42/$1,000)*.39 - 1
T = -0.0057
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($985.42 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($985.42/$1,000) - 1
T = -0.0146
</TABLE>
<PAGE>
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL LATIN AMERICA GROWTH FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($625.82 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $625.82
(T + 1)*1 = ($625.82/$1,000)
T + 1 = ($625.82/$1,000)*1
T = ($625.82/$1,000)*1 - 1
T = -0.3742
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,013.48 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*2.58 = $1,013.48
(T + 1)*2.58 = ($1,013.48/$1,000)
T + 1 = ($1,013.48/$1,000)*.39
T = ($1,013.48/$1,000)*.39 - 1
T = 0.0052
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,013.48 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,013.48/$1,000) - 1
T = 0.0135
</TABLE>
<PAGE>
EXHIBIT 16(V)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT LATIN AMERICA GROWTH FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Latin
America Growth Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($965.52 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($965.52/$1,000) - 1
T = -0.0345
</TABLE>
NON-STANDARDIZED RETURN
TIME PERIOD COVERED: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($965.52, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($965.52/$1,000) - 1
T = -0.0345
</TABLE>
<PAGE>
EXHIBIT 16(VI)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL TELECOMMUNICATIONS FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A shares of the GT Global
Telecommunications Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value ($925.11 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $925.11
(1 + T)*1 = $925.11/$1,000
1 + T = ($925.11/$1,000)*1
T = ($925.11/$1,000)*1 - 1
T = -0.0749
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual total return
n = number of years (1,373 DIVIDED BY 365 = 3.76)
ERV = ending redeemable value ($1,484.77 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.76 = $1,484.77
(1 + T)*3.76 = $1,484.77/$1,000
1 + T = ($1,484.77/$1,000)*.27
T = ($1,484.77/$1,000)*.27 - 1
T = 0.1108
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA + P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,484.77, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,484.77/$1,000) - 1
T = 0.4848
</TABLE>
<PAGE>
EXHIBIT 16(VI)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL TELECOMMUNICATIONS FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years(1)
ERV = ending redeemable value ($971.25 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $971.25
(1 + T)*1 = $971.25/$1,000
1 + T = $971.25/$1,000
T = ($971.25/$1,000) - 1
T = -0.0288
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
n = number of years (1,373 DIVIDED BY 365 = 3.76)
T = average annual total return
VOA = ending value of account ($1,604.96 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.76 = $1,558.81
(1 + T)*3.76 = $1,558.81/$1,000
1 + T = ($1,558.81/$1,000)*.27
T = ($1,558.81/$1,000)*.27 - 1
T = 0.1253
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA + P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,558.81) which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,558.81/$1,000) - 1
T = 0.5588
</TABLE>
<PAGE>
EXHIBIT 16(VI)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL TELECOMMUNICATIONS FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B shares of the GT Global
Telecommunications Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years(1)
ERV = ending redeemable value ($920.41 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $920.41
(1 + T)*1 = ($920.41/$1,000)
1 + T = ($920.41/$1,000)*1
T = ($920.41/$1,000)*1 - 1
T = -0.0796
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,399.15 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*2.58 = $1,399.15
(1 + T)*2.58 = ($1,399.15/$1,000)
1 + T = ($1,399.15/$1,000)*.39
T = ($1,399.15/$1,000)*.39 - 1
T = 0.1197
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,339.15, which assumes deduction of the maximum
5% contingent deferred sales charge on a $1,000 investment at the end of
the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,339.15/$1,000) - 1
T = 0.3392
</TABLE>
<PAGE>
EXHIBIT 16(VI)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL TELECOMMUNICATIONS FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years(1)
ERV = ending redeemable value ($966.25 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $966.25
(1 + T)*1 = ($966.25/$1,000)
1 + T = ($966.25/$1,000)*1
T = ($966.25/$1,000)*1 - 1
T = -0.0337
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,369.15 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*2.58 = $1,369.15
(1 + T)*2.58 = ($1,369.15/$1,000)
1 + T = ($1,369.15/$1,000)*.39
T = ($1,369.15/$1,000)*.39 - 1
T = 0.1293
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,369.15 which does not take the applicable
contingent deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,369.15/$1,000) - 1
T = 0.3692
</TABLE>
<PAGE>
EXHIBIT 16(VI)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL TELECOMMUNICATIONS FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Telecommunications Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1,079.40 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,079.40/$1,000) - 1
T = 0.0794
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1,079.40, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,079.40/$1,000) - 1
T = 0.0794
</TABLE>
<PAGE>
EXHIBIT 16(VII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL EMERGING MARKETS FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A shares of the GT Global
Emerging Markets Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($733.07 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $733.07
(1 + T)*1 = $733.07/$1,000
1 + T = ($733.07/$1,000)*1
T = ($733.07/$1,000)*1 - 1
T = -0.2669
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,261 DIVIDED BY 365 = 3.45)
VOA = ending value of account ($1,235.36 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.45 = $1,235.36
(1 + T)*3.45 = $1,235.36/$1,000
1 + T = ($1,235.36/$1,000)*.29
T = ($1,235.36/$1,000)*.29 - 1
T = 0.0631
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,235.36 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,235.36/$1,000) - 1
T = 0.2354
</TABLE>
<PAGE>
EXHIBIT 16(VII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL EMERGING MARKETS FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual total return
ERV = ending redeemable value ($769.62 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $769.62
(1 + T) = $769.62/$1,000
1 + T = ($769.62/$1,000)
T = ($769.62/$1,000) - 1
T = -0.2304
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,261 DIVIDED BY 365 = 3.45)
VOA = ending value of account ($1,296.96, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.45 = $1,296.96
(1 + T)*3.45 = $1,296.96/$1,000
1 + T = ($1,296.96/$1,000)*.29
T = ($1,296.96/$1,000)*.29 - 1
T = 0.0782
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,296.96, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,296.96/$1,000) - 1
T = 0.2970
</TABLE>
<PAGE>
EXHIBIT 16(VII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL EMERGING MARKETS FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B shares of the GT Global
Emerging Markets Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($729.65 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $729.65
(T + 1)*1 = $729.65/$1,000
T + 1 = ($729.65/$1,000)*1
T = ($729.65/$1,000)*1 - 1
T = -0.2704
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (945 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,237.66, which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*2.58 = $1,237.66
(T + 1)*2.58 = $1,237.66/$1,000
T + 1 = ($1,237.66/$1,000)*.39
T = ($1,237.66/$1,000)*.39 - 1
T = 0.0860
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,237.66 which assumes deduction of the maximum
5% contingent deferred sales charge at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,237.66/$1,000) - 1
T = 0.2377
</TABLE>
<PAGE>
EXHIBIT 16(VII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL EMERGING MARKETS FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($766.26, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $766.26
(T + 1)*1 = $766.26/$1,000
T + 1 = ($766.26/$1,000)*1
T = ($766.26/$1,000)*1 - 1
T = -0.2337
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (943 DIVIDED BY 365 = 2.58)
VOA = ending value of account ($1,267.66, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*2.58 = $1,267.66
(T + 1)*2.58 = $1,267.66/$1,000
T + 1 = ($1,267.66/$1,000)*.39
T = ($1,267.66/$1,000)*.39 - 1
T = 0.0961
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,267.66, which does not take the applicable
contingent deferred sales charges into account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,267.66/$1,000) - 1
T = 0.2677
</TABLE>
<PAGE>
EXHIBIT 16(VII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL EMERGING MARKETS FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Emerging Markets Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($942.90 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($942.90/$1,000) - 1
T = -0.0571
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($942.90, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($942.90/$1,000) - 1
T = -0.0571
</TABLE>
<PAGE>
EXHIBIT 16(VIII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HIGH INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations and SEC Yield Quotation for the Class A
shares of the GT Global High Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($979.28 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $979.28
(1 + T)*1 = $979.28/$1,000
1 + T = ($979.28/$1,000)*1
T = ($979.28/$1,000)*1 - 1
T = -0.0207
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,315.91 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,315.91
(1 + T)*3.02 = $1,315.91/$1,000
1 + T = ($1,315.91/$1,000)*.33
T = ($1,315.91/$1,000)*.33 - 1
T = 0.0950
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,315.91, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,315.91/$1,000) - 1
T = 0.3159
</TABLE>
<PAGE>
EXHIBIT 16(VIII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HIGH INCOME FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual (aggregate) total return
ERV = ending redeemable value ($1,028.12 which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $1,028.12
(1 + T) = $1,028.12/$1,000
1 + T = ($1,028.12/$1,000)
T = ($1,028.12/$1,000) - 1
T = 0.0281
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,381.53, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,381.53
(1 + T)*3.02 = $1,381.53/$1,000
1 + T = ($1,381.53/$1,000)*.33
T = ($1,381.53/$1,000)*.33 - 1
T = 0.1128
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,381.53, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,381.53/$1,000) - 1
T = 0.3815
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEC YIELD
Time period covered: month ended October 31, 1995
FORMULA:
YIELD = 2X((((a - b)/(cd) + 1)*6 - 1)
a = dividends and interest earned during the period = $1,674,014.47
b = expenses accrued for the period (net of reimbursements) = $113,866.62
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 12,051,186.92
d = maximum offering price per share on the last day of the period = $12.29
COMPUTATION:
YIELD = 2X((((1,674,014.47 - 113,866.62) / (12,051,186.92 X 12.29)) + 1)*6 - 1)
YIELD = 12.98%
<PAGE>
EXHIBIT 16(VIII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HIGH INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations and SEC Yield Quotation for the Class B
shares of the GT Global High Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = $1,000
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($974.12 which assumes deduction of the maximum 5%
contingent deferred sales charge on a $1,000 investment at the end of the
period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $974.12
(1 + T)*1 = $974.12/$1,000
1 + T = ($974.12/$1,000)*1
T = ($974.12/$1,000)*1 - 1
T = -0.0259
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,333.66 which assumes deduction of the
applicable 4% contingent deferred sales charge on a $1,000 investment at
the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,333.66
(1 + T)*3.02 = $1,333.66/$1,000
1 + T = ($1,333.66/$1,000)*.33
T = ($1,333.66/$1,000)*.33 - 1
T = 0.0999
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,333.66, which assumes deduction of the
applicable 4% contingent deferred sales charge on a $1,000 investment at
the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,333.66/$1,000) - 1
T = 0.3337
</TABLE>
<PAGE>
EXHIBIT 16(VIII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HIGH INCOME FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T) = ERV
P = $1,000
T = average annual (aggregate) total return
ERV = ending redeemable value ($1,020.66 which does not take the contingent
deferred sales charge into account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T) = $1,020.66
(1 + T) = $1,020.66/$1,000
1 + T = ($1,020.66/$1,000)
T = ($1,020.66/$1,000) - 1
T = 0.0207
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1993 (commencement of operations)-October 31,
1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1,104 DIVIDED BY 365 = 3.02)
VOA = ending value of account ($1,353.66, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*3.02 = $1,353.66
(1 + T)*3.02 = $1,353.66/$1,000
1 + T = ($1,353.66/$1,000)*.33
T = ($1,353.66/$1,000)*.33 - 1
T = 0.1053
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,353.66, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
($1,353.66/$1,000) - 1
T = 0.3537
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEC YIELD
Time period covered: month ended October 31, 1995
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $2,533,567.76
b = expenses accrued for the period (net of reimbursements) = $290,218.56
c = average daily number of shares outstanding that was entitled to receive
dividends = 18,417,216.62
d = maximum offering price per share on the last day of the period = $11.69
YIELD = 2X((((2,553,567.76 - 290,218.56) / (18,417,216.62 X 11.69)) + 1)*6 - 1)
YIELD = 12.95%
<PAGE>
EXHIBIT 16(VIII)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL HIGH INCOME FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
High Income Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,065.40 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = (1,065.40/$1,000) - 1
T = 0.0654
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,065.40, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = (1,065.40/$1,000) - 1
T = 0.0654
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEC YIELD
Time period covered: month ended October 31, 1995
FORMULA:
YIELD = 2X((((a-b)/(cd)) + 1)*6 - 1)
a = dividends and interest earned during the period = $17,273.69
b = expenses accrued for the period (net of reimbursement) = $752.82
c = average daily number of shares outstanding during the period that were
entitled to receive dividends = 124,468.60
d = maximum offering price per share on the last day of the period = $11.71
COMPUTATION:
YIELD = 2X((((17,273.69 - 752.82) / (124,468.60 X 11.71)) + 1)*6 - 1)
YIELD = 13.99%
<PAGE>
EXHIBIT 16(IX)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL FINANCIAL SERVICES FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A Shares of the GT Global
Financial Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($977.09 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $977.09
(T + 1)*1 = ($977.09/$1,000)
T + 1 = ($977.09/$1,000)*1
T = ($977.09/$1,000)*1 - 1
T = -0.0229
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($993.33 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $993.33
(T + 1)*1.42 = ($993.33/$1,000)
T + 1 = ($993.33/$1,000)*.70
T = ($993.33/$1,000)*.70 - 1
T = -0.0047
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($993.33, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($993.33/$1,000) - 1
T = -0.0067
</TABLE>
<PAGE>
EXHIBIT 16(IX)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL FINANCIAL SERVICES FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1025.82, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $1,025.82
(T + 1)*1 = ($1,025.82/$1,000)
T + 1 = ($1,025.82/$1,000)*1
T = ($1,025.82/$1,000)*1 - 1
T = 0.0258
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($1042.87, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,042.87
(T + 1)*1.42 = ($1,042.87/$1,000)
T + 1 = ($1,042.87/$1,000)*.70
T = ($1,042.87/$1,000)*.70 - 1
T = 0.0300
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,042.87, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,042.87/$1,000) - 1
T = 0.0429
</TABLE>
<PAGE>
EXHIBIT 16(IX)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL FINANCIAL SERVICES FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B Shares of the GT Global
Financial Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($969.83 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $969.83
(T + 1)*1 = ($969.83/$1,000)
T + 1 = ($969.83/$1,000)*1
T = ($969.83/$1,000)*1 - 1
T = -0.0302
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($995.00 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $995.00
(T + 1)*1.42 = ($995.00/$1,000)
T + 1 = ($995.00/$1,000)*.70
T = ($995.00/$1,000)*.70 - 1
T = -0.0035
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($995.00 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($995.00/$1,000) - 1
T = -0.0050
</TABLE>
<PAGE>
EXHIBIT 16(IX)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL FINANCIAL SERVICES FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1,019.83, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $1,019.83
(T + 1)*1 = ($1,019.83/$1,000)
T + 1 = ($1,019.83/$1,000)*1
T = ($1,019.83/$1,000)*1 - 1
T = 0.0198
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($1,035.00, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,035.00
(T + 1)*1.42 = ($1,035.00/$1,000)
T + 1 = ($1,035.00/$1,000)*.70
T = ($1,035.00/$1,000)*.70 - 1
T = 0.0245
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,035.00, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,035.00/$1,000) - 1
T = 0.0350
</TABLE>
<PAGE>
EXHIBIT 16(IX)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL FINANCIAL SERVICES FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Financial Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,077.55 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,077.55/$1,000) - 1
T = 0.0775
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,077.55, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,077.55/$1,000) - 1
T = 0.0775
</TABLE>
<PAGE>
EXHIBIT 16(X)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL INFRASTRUCTURE FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A Shares of the GT Global
Infrastructure Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($925.00 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $925.00
(T + 1)*1 = ($925.00/$1,000)
T + 1 = ($925.00/$1,000)*1
T = ($925.00/$1,000)*1 - 1
T = -0.0750
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending redeemable value ($1,009.17 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,009.17
(T + 1)*1.42 = ($1,009.17/$1,000)
T + 1 = ($1,009.17/$1,000)*.70
T = ($1,009.17/$1,000)*.70 - 1
T = 0.0065
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,009.17, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,009.17/$1,000) - 1
T = 0.0092
</TABLE>
<PAGE>
EXHIBIT 16(X)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL INFRASTRUCTURE FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($971.13, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $971.13
(T + 1)*1 = ($971.13/$1,000)
T + 1 = ($971.13/$1,000)*1
T = ($971.13/$1,000)*1 - 1
T = -0.0289
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = aggregate total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($1,059.49, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,059.49
(T + 1)*1.42 = ($1,059.49/$1,000)
T + 1 = ($1,059.49/$1,000)*.70
T = ($1,059.49/$1,000)*.70 - 1
T = 0.0416
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,059.49, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,059.49/$1,000) - 1
T = 0.0595
</TABLE>
<PAGE>
EXHIBIT 16(X)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL INFRASTRUCTURE FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B Shares of the GT Global
Infrastructure Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($917.95 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $917.95
(T + 1)*1 = ($917.95/$1,000)
T + 1 = ($917.95/$1,000)*1
T = ($917.95/$1,000)*1 - 1
T = -0.0820
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*1 = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($1,012.49, which which assumes deduction of the
maximum 4.00% sales charge on a $1,000 investment at the end of the
period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,012.49
(T + 1)*1.42 = ($1,012.49/$1,000)
T + 1 = ($1,012.49/$1,000)*.70
T = ($1,012.49/$1,000)*.70 - 1
T = 0.0088
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,012.49, which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,012.49/$1,000) - 1
T = 0.0125
</TABLE>
<PAGE>
EXHIBIT 16(X)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL INFRASTRUCTURE FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($966.27, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $966.27
(T + 1)*1 = (966.27/$1,000)
T + 1 = ($966.27/$1,000)*1
T = ($966.27/$1,000)*1 - 1
T = -0.0337
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($1,052.49, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,052.49
(T + 1)*1.42 = ($1,052.49/$1,000)
T + 1 = ($1,052.49/$1,000)*.70
T = ($1,052.49/$1,000)*.70 - 1
T = 0.0367
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,052.49, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,052.49/$1,000) - 1
T = 0.0525
</TABLE>
<PAGE>
EXHIBIT 16(X)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL INFRASTRUCTURE FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Infrastructure Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,011.67 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,011.67/$1,000) - 1
T = 0.0117
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1,011.67, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = (1,011.67/$1,000) - 1
T = 0.0117
</TABLE>
<PAGE>
EXHIBIT 16(XI)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL NATURAL RESOURCES FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A Shares of the GT Global
Natural Resources Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($880.29 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $880.29
(T + 1)*1 = ($880.29/$1,000)
T + 1 = ($880.29/$1,000)*1
T = ($880.29/$1,000)*1 - 1
T = -0.1197
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($955.76 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $955.76
(T + 1)*1.42 = ($955.76/$1,000)
T + 1 = ($955.76/$1,000)*.70
T = ($955.76/$1,000)*.70 - 1
T = -0.0314
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($955.76, which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($955.76/$1,000) - 1
T = -0.0442
</TABLE>
<PAGE>
EXHIBIT 16(XI)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL NATURAL RESOURCES FUND
CLASS A SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($924.18, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1 = $924.18
(T + 1)*1 = ($924.18/$1,000)
T + 1 = ($924.18/$1,000)*1
T = ($924.18/$1,000)*1 - 1
T = -0.0758
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($1,003.42, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $1,003.42
(T + 1)*1.42 = ($1,003.42/$1,000)
T + 1 = ($1,003.42/$1,000)*.70
T = ($1,003.42/$1,000)*.70 - 1
T = 0.0024
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,003.42, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,003.42/$1,000) - 1
T = 0.0034
</TABLE>
<PAGE>
EXHIBIT 16(XI)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL NATURAL RESOURCES FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B Shares of the GT Global
Natural Resources Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($873.58 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $873.58
(T + 1)*1 = ($873.58/$1,000)
T + 1 = ($873.58/$1,000)*1
T = ($873.58/$1,000)*1 - 1
T = -0.1264
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($956.13 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $956.13
(T + 1)*1.42 = ($956.13/$1,000)
T + 1 = ($956.13/$1,000)*.70
T = ($956.13/$1,000)*.70 - 1
T = -0.0311
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($956.13 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($956.13/$1,000) - 1
T = -0.0439
</TABLE>
<PAGE>
EXHIBIT 16(XI)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL NATURAL RESOURCES FUND
CLASS B SHARES
NON-STANDARDIZED RETURN
Time period covered: October 31, 1994-October 31, 1995
FORMULA: P(1 + T)*n = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeemable value ($919.47, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (1 + T)*1 = $919.47
(T + 1)*1 = ($919.47/$1,000)
T + 1 = ($919.47/$1,000)*1
T = ($919.47/$1,000)*1 - 1
T = -0.0805
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: P(1 + T)*n = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (518 DIVIDED BY 365 = 1.42)
VOA = ending value of account ($995.89, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
$1,000 (T + 1)*1.42 = $995.89
(T + 1)*1.42 = ($995.89/$1,000)
T + 1 = ($995.89/$1,000)*.70
T = ($995.89/$1,000)*.70 - 1
T = -0.0029
</TABLE>
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) = 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($995.89, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($995.89/$1,000) - 1
T = -0.0041
</TABLE>
<PAGE>
EXHIBIT 16(XI)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL NATURAL RESOURCES FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Natural Resources Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,001.75 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,001.75/$1,000) - 1
T = 0.0017
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,001.75, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,001.75/$1,000) - 1
T = 0.0017
</TABLE>
<PAGE>
EXHIBIT 16(XII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL CONSUMER PRODUCTS & SERVICES FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class A Shares of the GT Global
Consumer Products & Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: December 30, 1994 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,215.83 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,215.83/$1,000) - 1
T = 0.2158
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: December 30, 1994 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,276.47, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,276.47/$1,000) - 1
T = 0.2765
</TABLE>
<PAGE>
EXHIBIT 16(XII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL CONSUMER PRODUCTS & SERVICES FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Class B Shares of the GT Global
Consumer Products & Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: December 30, 1994 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,221.22 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,221.22/$1,000) - 1
T = 0.2212
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: December 30, 1994 (commencement of operations)-October 31,
1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,271.22, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,271.22/$1,000) - 1
T = 0.2712
</TABLE>
<PAGE>
EXHIBIT 16(XII)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL CONSUMER PRODUCTS & SERVICES FUND
ADVISOR CLASS SHARES
The following is the schedule for the computation of the Standardized and
Non-Standardized Return quotations for the Advisor Class Shares of the GT Global
Consumer Products & Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,236.49 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,236.49/$1,000) - 1
T = 0.2365
</TABLE>
NON-STANDARDIZED RETURN
Time period covered: May 31, 1995 (commencement of operations)-October 31, 1995
FORMULA: T = (VOA DIVIDED BY P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1,236.49, which does not take sales charges into
account)
CALCULATION:
<TABLE>
<S> <C> <C>
T = ($1,236.49/$1,000) - 1
T = 0.2365
</TABLE>
<PAGE>
Exhibit 18
G.T. INVESTMENT FUNDS, INC.
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
G.T. Investment Funds, Inc. ("Company") hereby adopts this Multiple Class
Plan pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act") on behalf of its current operating series, GT Global Growth &
Income Fund ("Growth & Income Fund"), GT Global Government Income Fund
("Government Income Fund"), GT Global High Income Fund ("High Income Fund"), GT
Global Strategic Income Fund ("Strategic Income Fund"), GT Global Emerging
Markets Fund ("Emerging Markets Fund"), GT Global Latin America Growth Fund
("Latin America Growth Fund"), GT Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), GT Global Financial Services Fund
("Financial Services Fund"), GT Global Health Care Fund ("Health Care Fund"), GT
Global Infrastructure Fund ("Infrastructure Fund"), GT Global Natural Resources
Fund ("Natural Resources Fund"), GT Global Telecommunications Fund
("Telecommunications Fund") and any series that may commence operations in the
future (referred to hereinafter collectively as the "Funds" and individually as
a "Fund").
A. GENERAL DESCRIPTION OF CLASSES THAT ARE OFFERED
1. CLASS A SHARES. Class A shares of each Fund are sold to the general
public subject to an initial sales charge of 4.75% of the public offering price
for Class A shares of the Fund. The initial sales charge is waived for certain
eligible purchasers and reduced or waived for certain large volume purchases.
Class A shares of each Fund may pay a service fee at the annualized rate of
up to 0.25% of the average daily net assets for the Fund's Class A shares.
Class A shares of the High Income Fund, Government Income Fund, Strategic Income
Fund and Growth & Income Fund may pay a distribution fee at the annualized rate
of up to 0.35% of the average daily net assets for the Fund's Class A shares,
less any amounts paid by the respective Fund as the aforementioned service fee.
Class A shares of the Emerging Markets Fund, Latin America Growth Fund, Consumer
Products and Services Fund, Financial Services Fund, Health Care Fund,
Infrastructure Fund, Natural Resources Fund and Telecommunications Fund may pay
a distribution fee at the annualized rate of up to 0.50% of the average daily
net assets for the Fund's Class A shares, less any amounts paid by the
respective Fund as the aforementioned service fee. Such fees are paid pursuant
to a plan of distribution adopted in accordance with Rule 12b-1 under the 1940
Act.
Class A shares of each Fund are subject to a contingent deferred sales
charge ("CDSC") on redemptions of shares: (i) purchased without an initial
sales charge due to a sales charge waiver for purchases of $500,000 or more, and
(ii) redeemed within one year
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 2
after the date of purchase. Purchases of Class A shares of two or more GT
Global Mutual Funds (other than GT Global Dollar Fund) may be combined for this
purpose. The Class A CDSC is equal to 1% of the lower of (i) the original
purchase price, or (ii) the net asset value of the shares at the time of
redemption.
Class A shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of dividends
or other distributions, or (ii) Class A shares redeemed one year or more after
their purchase. Class A shares purchased in amounts of at least $500,000
without a sales charge may be exchanged for Class A shares of another GT Global
Mutual Fund (other than GT Global Dollar Fund) without the imposition of a CDSC,
although the CDSC will apply to the redemption of the shares acquired through an
exchange.
2. CLASS B SHARES. Class B shares of each Fund are sold to the general
public without imposition of an initial sales charge; however, a CDSC is imposed
on certain redemptions of Class B shares. The maximum CDSC for Class B shares
is equal to 5% of the lesser of the original purchase price or the net asset
value of the shares at the time of redemption. The CDSC is waived for certain
exchanges and redemptions.
Class B shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of dividends
or capital gains distributions, or (ii) shares redeemed more than six years
after their purchase.
Class B shares are subject to a service fee at the annualized rate of up to
0.25% of the average daily net assets of the Class B shares of each Fund and 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. Such fees are paid pursuant to a plan of
distribution adopted in accordance with Rule 12b-1 under the 1940 Act.
3. ADVISOR CLASS SHARES. Advisor Class shares are sold without
imposition of an initial sales charge or CDSC and are not subject to any service
or distribution fees.
Advisor Class shares of each Fund are available for purchase only by: (a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 1,000 employees; (b) any
account with assets of at least $25,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of at least $25,000 if
(i) such
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 3
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 0.50% on
the assets in the account; (d) accounts advised by one of the companies
comprising or affiliated with Liechtenstein Global Trust; and (e) any of the
companies comprising or affiliated with Liechtenstein Global Trust.
B. EXPENSE ALLOCATIONS OF EACH CLASS
Certain expenses may be attributable to a particular Class of shares
("Class Expenses"). Class Expenses are charged directly to the net assets of
the particular Class and, thus, are borne on a pro rata basis by the outstanding
shares of that Class.
In addition to the service and distribution fees described above, each
Class could also pay a different amount of the following other expenses:
(1) transfer agent fees identified as being attributable to a
specific Class of shares;
(2) stationary, printing, postage and delivery expenses related
to preparing and distributing materials such as shareholder
reports, prospectuses and proxy statements to current
shareholders of a specific Class of shares;
(3) Blue Sky registration fees incurred by a specific Class of
shares;
(4) SEC registration fees incurred by a specific Class of
shares;
(5) expenses of administrative personnel and services as
required to support the shareholders of a specific Class of
shares;
(6) Directors' fees or expenses incurred as a result of issues
relating to a specific Class of shares;
(7) accounting expenses relating solely to a specific Class of
shares;
(8) auditors' fees, litigation expenses and legal fees and
expenses relating to a specific Class of shares; and
(9) expenses incurred in connection with shareholders meetings
as a result of issues relating to a specific Class of
shares.
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 4
C. EXCHANGE PRIVILEGES
Class A shares of any Fund may be exchanged only for Class A shares of
other GT Global Mutual Funds, as listed in the Fund's Prospectus. Class B
shares of any Fund may be exchanged only for Class B shares of other GT Global
Mutual Funds, as listed in the Fund's Prospectus. Advisor Class shares of any
Fund may be exchanged only for Advisor Class shares of other GT Global Mutual
Funds, as listed in the Fund's Prospectus.
This exchange privilege is available only in those jurisdictions where the
sale of GT Global Mutual Fund shares to be acquired may be legally made. The
terms of the exchange privileges may be modified at any time, on sixty days'
prior written notice to shareholders.
D. ADDITIONAL INFORMATION
The prospectus for each Fund contains additional information about the
Classes and each Fund's multiple class structure. This Multiple Class Plan is
subject to the terms of the then current prospectus for the applicable Classes;
provided, however, that none of the terms set forth in any such prospectus shall
be inconsistent with the terms of the Classes contained in this Plan.
E. DATE OF EFFECTIVENESS
This Multiple Class Plan will become effective on _________, 1996. Before
any material amendment of this Multiple Class Plan, a majority of the Directors
of the Company, and a majority of the Directors who are not interested persons
of the Company, shall find that the plan as proposed to be adopted or amended,
including the expense allocation, is in the best interests of each class
individually and the Company as a whole.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826644
<NAME> G.T. INVESTMENT FUNDS, INC.
<SERIES>
<NUMBER> 011
<NAME> G.T. GLOBAL STRATEGIC INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 533002
<INVESTMENTS-AT-VALUE> 537412
<RECEIVABLES> 69999
<ASSETS-OTHER> 44284
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 651695
<PAYABLE-FOR-SECURITIES> 56250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48985
<TOTAL-LIABILITIES> 105235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 697904
<SHARES-COMMON-STOCK> 18225
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (68)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (152991)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1615
<NET-ASSETS> 546459
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 65876
<OTHER-INCOME> 0
<EXPENSES-NET> (10957)
<NET-INVESTMENT-INCOME> 54919
<REALIZED-GAINS-CURRENT> (82676)
<APPREC-INCREASE-CURRENT> 32193
<NET-CHANGE-FROM-OPS> 4436
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16844)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (852)
<NUMBER-OF-SHARES-SOLD> 10413
<NUMBER-OF-SHARES-REDEEMED> (18673)
<SHARES-REINVESTED> 1180
<NET-CHANGE-IN-ASSETS> (187332)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4293
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11092
<AVERAGE-NET-ASSETS> 568197
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> .97
<PER-SHARE-GAIN-APPREC> (.69)
<PER-SHARE-DIVIDEND> (.80)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.04)
<PER-SHARE-NAV-END> 10.32
<EXPENSE-RATIO> 1.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826644
<NAME> G.T. INVESTMENT FUNDS, INC.
<SERIES>
<NUMBER> 012
<NAME> G.T. GLOBAL STRATEGIC INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 533002
<INVESTMENTS-AT-VALUE> 537412
<RECEIVABLES> 69999
<ASSETS-OTHER> 44284
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 651695
<PAYABLE-FOR-SECURITIES> 56250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48985
<TOTAL-LIABILITIES> 105235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 697904
<SHARES-COMMON-STOCK> 34647
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (68)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (152991)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1615
<NET-ASSETS> 546459
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 65876
<OTHER-INCOME> 0
<EXPENSES-NET> (10957)
<NET-INVESTMENT-INCOME> 54919
<REALIZED-GAINS-CURRENT> (82676)
<APPREC-INCREASE-CURRENT> 32193
<NET-CHANGE-FROM-OPS> 4436
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (27777)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (1405)
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