<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL EMERGING MARKETS FUND
PROSPECTUS -- MARCH 1, 1995
AS REVISED JANUARY 5, 1996
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GT Global Emerging Markets Fund ("Emerging Markets Fund") is a mutual fund,
organized as a diversified series of G.T. Investment Funds, Inc., seeking
long-term growth of capital. The Emerging Markets Fund primarily invests in
equity securities of companies in emerging markets. GT Global Latin America
Growth Fund ("Latin America Growth Fund") is a mutual fund, organized as a
non-diversified series of G.T. Investment Funds, Inc., that seeks capital
appreciation by investing at least 65% of its total assets in securities of a
broad range of Latin American issuers, including common stock and other equity
securities, as well as debt securities.
The Funds' investment manager, LGT Asset Management, Inc. ("LGT Asset
Management"), formerly G.T. Capital Management, Inc., and its worldwide
affiliates, are part of Liechtenstein Global Trust, formerly BIL GT Group
Limited, a provider of global asset management and private banking products and
services to individual and institutional investors. On January 1, 1996, G.T.
Capital Management, Inc. was renamed LGT Asset Management, and BIL GT Group
Limited was renamed Liechtenstein Global Trust. 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.
PROSPECTIVE WISCONSIN INVESTORS SHOULD NOTE THAT THE EMERGING MARKETS FUND MAY
(I) INVEST UP TO 10% OF ITS TOTAL ASSETS IN RESTRICTED SECURITIES AND (II) MAKE
SHORT SALES OF SECURITIES. THESE INVESTMENT ACTIVITIES MAY BE CONSIDERED
SPECULATIVE AND MAY INVOLVE GREATER RISK AND MAY INCREASE EMERGING MARKETS FUND
EXPENSES.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information for each Fund dated March 1, 1995, as
revised January 5, 1995, has been filed with the Securities and Exchange
Commission and is incorporated by reference. The Statement of Additional
Information, which may be amended or supplemented from time to time, is
available without charge by writing to the Funds at 50 California Street, 27th
Floor, San Francisco, California 94111, or calling (800) 824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
An investment in one or both of the Funds offers the following advantages:
/ / Access to Securities Markets Around the World
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / 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 CONTACT (800) 824-1580 OR YOUR STOCKBROKER.
[LOGO]
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 10
Alternative Purchase Plan................................................................. 12
Investment Objectives and Policies........................................................ 13
Risk Factors.............................................................................. 22
How to Invest............................................................................. 27
How to Make Exchanges..................................................................... 33
How to Redeem Shares...................................................................... 34
Shareholder Account Manual................................................................ 36
Calculation of Net Asset Value............................................................ 37
Dividends, Other Distributions and Federal Income Taxation................................ 37
Management................................................................................ 39
Other Information......................................................................... 43
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
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The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
Investment Objectives: The Emerging Markets Fund seeks long-term growth of capital
The Latin America Growth Fund seeks capital appreciation
Principal Investments: The Emerging Markets Fund normally invests at least 65% of its
total assets in equity securities of companies in emerging markets
The Latin America Growth Fund normally invests at least 65% of its
total assets in equity and debt securities issued by Latin
American companies and governments
Investment Manager: 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 the Class A shares of Emerging Markets
Fund and Latin America Growth Fund
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 the Class B shares of each Fund
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 and registered
with the Securities and Exchange Commission
Dividends and Other Distribu-
tions: Dividends paid annually from available net investment income and
realized net short-term capital gains; other distributions paid
annually from realized net capital gain and net gains from foreign
currency transactions, if any
Reinvestment: Distributions may be reinvested automatically in 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 IRAs and reduced amounts for certain other
retirement plans)
Subsequent Purchases: $100 minimum (reduced amounts for individual retirement accounts
("IRAs") and certain other retirement plans)
Net Asset Values: Class A and 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 Systematic Withdrawal Plan
Right of Accumulation Automatic Investment Plan
Reinstatement Privilege
Class B Shares Reinstatement Privilege Automatic Investment Plan
Dollar Cost Averaging Program Systematic Withdrawal Plan
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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THE FUNDS. The GT Global Emerging Markets Fund is a diversified mutual fund and
the GT Global 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. 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 the Funds' distributor 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."
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management is the Funds'
investment manager and administrator. LGT Asset Management provides investment
management or administrative services to all of the GT Global Mutual Funds as
well as other institutional, corporate and individual clients. 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. On January 1, 1996, G.T. Capital
Management, Inc. was renamed LGT Asset Management, and BIL GT Group Limited was
renamed Liechtenstein Global Trust. As of November 30, 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, POLICIES AND RISK FACTORS.
EMERGING MARKETS FUND: The Emerging Markets Fund seeks long-term growth of
capital. It normally invests at least 65% of its total assets in equity
securities of companies in emerging markets. The Emerging Markets Fund considers
emerging markets to include all the world's countries except the United States,
Canada, Japan, Australia, New Zealand and most countries in Western Europe. See
"Investment Objectives and Policies" for a list of the emerging markets in which
the Emerging Markets Fund will consider investing for purposes of this 65%
policy. The Emerging Markets Fund may invest in the following types of equity
securities: common stocks, preferred stocks, securities convertible into such
stocks and rights and warrants to acquire such securities.
Consistent with its investment objective, the Emerging Markets Fund may invest
up to 35% of its total assets in a combination of: (i) debt securities of
government or corporate issuers in emerging markets; (ii) equity and debt
securities of issuers in developed countries, including the United States; (iii)
securities of issuers in emerging markets not specifically listed in this
Prospectus where investing may become feasible and desirable subsequent to the
date of this Prospectus; and (iv) cash and money market instruments.
The Emerging Markets Fund may invest up to 20% of its total assets in debt
securities rated below investment grade, and additionally may invest up to 15%
of its net assets in illiquid securities.
For temporary defensive purposes, the Emerging Markets Fund may hold cash (U.S.
dollars or foreign currencies) and/or invest any portion of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
The Emerging Markets Fund also may hold cash and invest in high quality foreign
or domestic money market instruments pending investment of proceeds from sales
of Emerging Markets Fund shares, or to meet its ordinary daily cash needs.
See "Investment Objectives and Policies" in the body of the Prospectus for a
more complete discussion of the Emerging Markets Fund's investment policies.
RISK FACTORS: EMERGING MARKETS FUND. There is no assurance that the Emerging
Markets Fund will achieve its investment objective. The Emerging
Prospectus Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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Markets Fund's net asset value will fluctuate, reflecting fluctuations in the
market value of its portfolio positions, expressed in U.S. dollars.
Investments in foreign securities involve risks relating to political and
economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies may
differ favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates affect the Emerging Markets Fund's net asset value,
earnings and gains and losses realized on sales of securities. Securities of
foreign companies may be less liquid and their prices more volatile than those
of securities of comparable U.S. companies. Each of these risks generally is
greater for investments in emerging markets. Because of the special risks
associated with investing in emerging markets, an investment in the Emerging
Markets Fund should be considered speculative. Certain foreign countries may
impose withholding taxes on income earned and/or gains realized by the Emerging
Markets Fund in connection with investments in such countries. See "Risk
Factors."
Investment by the Emerging Markets Fund in debt securities rated below
investment grade involves a high degree of risk. Certain of such investments may
be regarded as speculative. See "Risk Factors."
LATIN AMERICA GROWTH FUND: The Latin America Growth Fund's investment objective
is capital appreciation. The Latin America Growth Fund normally invests at least
65% of its total assets in securities of a broad range of Latin American
issuers. Under current market conditions, the Latin America Growth Fund expects
to invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. However, the Latin America
Growth Fund reserves the right to be primarily invested in U.S. securities for
temporary defensive purposes or pending investment of the proceeds of new sales
of Fund shares.
Although investment opportunities in certain Latin American countries currently
may be limited, 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. The amount invested in any one of these four countries
will vary depending on economic and other market conditions and the regulatory
environment with respect to that country. From time to time, a significant
portion of the Latin America Growth Fund's assets may be invested in any one of
them.
In selecting securities for the Latin America Growth Fund, LGT Asset Management
attempts to identify those countries and industries where economic and political
factors are likely to produce above-average growth, and then selects those
investments within the countries and industries so identified that in LGT Asset
Management's view are best positioned and managed to take advantage of such
factors. See "Investment Objectives and Policies" and "Risk Factors." Under
normal market conditions, the Latin America Growth Fund expects that a majority
of its investment portfolio will be comprised of equity securities. Equity
securities in which the Latin America Growth Fund may invest include common
stocks, preferred stocks and warrants to acquire such securities. Under normal
circumstances, the Latin America Growth Fund may invest up to 35% of its total
assets in a combination of equity and debt securities of U.S. issuers.
The portion of the Latin America Growth Fund's assets not invested in equity
securities may be invested in corporate and government debt securities and in
money market securities (as defined herein). The Latin America Growth Fund may
seek capital appreciation through investment in such debt securities, which
would occur through favorable changes in relative foreign exchange rates, in
relative interest rate levels, or in the creditworthiness of issuers. The
receipt of income from such debt securities is incidental to the Fund's
objective of capital appreciation.
In particular, the Latin America Growth Fund normally may invest up to 50% of
its total assets in
Prospectus Page 5
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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external debt obligations issued or guaranteed by Latin American governments or
governmental entities. External debt obligations are those in which a foreign
entity or individual extends credit to a Latin American borrower. In addition,
the Latin America Growth Fund may hold and trade certain debt securities issued
by Latin American governments ("Sovereign Debt"), including those that are or
may become eligible for conversion into investments in Latin American
enterprises under debt conversion programs sponsored by various Latin American
countries, or may convert such debt into equity or other investments under debt
conversion programs. See "Investment Objectives and Policies" and "Risk
Factors."
The Fund may invest in certain money market securities (as defined herein) for
the purpose of generating income to defray Latin America Growth Fund expenses,
for temporary defensive purposes and pending investment in accordance with the
Latin America Growth Fund's investment objective and policies.
RISK FACTORS: LATIN AMERICA GROWTH FUND. There is no assurance that the Latin
America Growth Fund will achieve its investment objective. The Latin America
Growth Fund's net asset value will fluctuate, reflecting fluctuations in the
market value of its portfolio positions and in the rate of exchange between the
currencies in which its positions are traded and the U.S. dollar. Because of the
Latin America Growth Fund's policy of investing primarily in securities of
foreign issuers, and specifically of Latin American issuers, an investment in
the Latin America Growth Fund requires consideration of certain factors that are
not typically associated with investing in securities of most U.S. issuers. Risk
factors associated with investment in the Latin America Growth Fund include: (1)
political, economic and certain other risks, such as expropriation,
nationalization or confiscation of the Latin America Growth Fund's assets or the
imposition of restrictions on foreign investment or the repatriation of capital
invested; (2) religious, political and ethnic instability; (3) custodial,
pricing and settlement issues; (4) the economic condition of Latin American
countries; (5) non-uniform accounting, auditing and corporate disclosure
standards and governmental regulation which may lead to less publicly available
and less reliable information concerning Latin American issuers than is
typically the case with respect to U.S. issuers; (6) less regulation of Latin
American securities markets generally than is the case in the U.S.; (7) currency
fluctuations; (8) the risk of currency devaluation; (9) high levels of
inflation; (10) smaller, less developed, less liquid and more volatile markets
than the major U.S. securities markets; and (11) the imposition of foreign
withholding taxes on the investment income and trading profits of the Latin
America Growth Fund.
Trading in Sovereign Debt involves a high degree of risk. The issuer of the debt
or the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal and/or interest when due in accordance
with the terms of such debt. Sovereign Debt in which the Latin America Growth
Fund will invest is widely considered to have a credit quality below investment
grade as determined by U.S. rating agencies (and as low as securities rated C by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's")). As a result, Sovereign Debt may be regarded as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations and involves major
risk exposure to adverse conditions.
The Latin America Growth Fund normally invests in a substantial number of
issuers; however, the Fund's classification as a non-diversified investment
company under the Investment Company Act of 1940, as amended ("1940 Act") means
that the Latin America Growth Fund may invest a larger percentage of its assets
in individual issuers than a diversified investment company. As a result, its
exposure to credit and market risks associated with each such issuer is
increased. See "Risk Factors" and "Other Information."
EXPENSES. Each Fund pays LGT Asset Management investment management and
administration fees, based on the average daily net assets of the Fund, at the
annualized rate of .975% on the first
Prospectus Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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$500 million, .95% on the next $500 million, .925% on the next $500 million, and
.90% on amounts thereafter. As the Fund's distributor, GT Global collects the
sales charges imposed on purchases of Class A shares, and reallows all or a
portion of such charges to broker/dealers that have made such sales. In
addition, GT Global collects any contingent deferred sales charges that may be
imposed on certain redemptions of Class A and on redemptions of Class B shares.
GT Global also pays brokers and other financial institutions ongoing payments
for servicing shareholder accounts and for sales efforts.
Pursuant to a distribution plan adopted in accordance with Rule 12b-1 under the
1940 Act, with respect to its Class A shares, the Funds may pay GT Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the respective Fund's Class A shares as reimbursement 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 the Funds' Class A shares, less any amounts paid by
these Funds as the aforementioned service fee, for its expenditures incurred in
providing services as distributor. Pursuant to a separate distribution plan
adopted in accordance with Rule 12b-1 under the 1940 Act with respect to its
Class B shares, the Funds may pay GT Global a service fee at the annualized rate
of up to 0.25% of the average daily net assets of Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and may
pay GT Global a distribution fee at the annualized rate of up to 0.75% of the
average daily net assets of its Class B shares as reimbursement for its
expenditures incurred in providing services as distributor. Each Fund pays all
its expenses not assumed by LGT Asset Management, GT Global or other agents. 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. See "Management."
Prospectus Page 7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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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
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<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.................................................................................... 0.58% 0.58%
----- -----
Total Fund Operating Expenses....................................................................... 2.06% 2.56%
----- -----
----- -----
</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 $ 109 $ 153
Class B Shares
Assuming a complete redemption at end of period (2).................................. 76 109 154
Assuming no redemption............................................................... 26 79 134
<CAPTION>
TEN
YEARS
-----
<S> <C>
Class A Shares (1)....................................................................... $ 273
Class B Shares
Assuming a complete redemption at end of period (2).................................. 286
Assuming no redemption............................................................... 286
</TABLE>
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(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable contingent deferred sales charge.
+ The Fund is authorized to offer Advisor Class shares to certain categories
of investors. See "Alternative Purchase Plan." Advisor Class shares are not
subject to a distribution or service fee. "Total Fund Operating Expenses"
for Advisor Class shares are estimated to approximate 1.56% 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, 1994. 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. "Other expenses" may be
reduced to the extent that (i) certain broker/dealers executing the Fund's
portfolio transactions pay all or a portion of the Fund's custodian fees or
transfer agency expenses, or (ii) fees received in connection with the
lending of portfolio securities are used to reduce custodian fees. These
arrangements are not anticipated to materially increase brokerage
commissions paid by the Fund. For the fiscal year ended October 31, 1994,
without such reductions, "Other expenses" for the Fund would have been 0.60%
for Class A shares and 0.60% for Class B shares. See "Management" herein and
in the Statement of Additional Information for more information. THE
"HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF 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.
Prospectus Page 8
<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...................................................... 0.97 % 0.97 %
12b-1 distribution and service fees................................................................ 0.50 % 1.00 %
Other expenses..................................................................................... 0.57 % 0.57 %
----- -----
Total Fund Operating Expenses........................................................................ 2.04 % 2.54 %
----- -----
----- -----
</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 $ 109 $ 152
Class B Shares
Assuming a complete redemption at end of period (2).................................. 75 108 153
Assuming no redemption............................................................... 25 78 133
<CAPTION>
TEN YEARS
-----
<S> <C>
Class A Shares (1)....................................................................... $ 271
Class B Shares
Assuming a complete redemption at end of period (2).................................. 284
Assuming no redemption............................................................... 284
</TABLE>
- --------------
(1) Assumes payment of payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable contingent deferred sales charge.
+ The Fund is authorized to offer Advisor Class shares to certain categories
of investors. See "Alternative Purchase Plan." Advisor Class shares are not
subject to a distribution or service fee. "Total Fund Operating Expenses"
for Advisor Class shares are estimated to approximate 1.54% 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, 1994. 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. "Other expenses"
may be reduced to the extent that (i) certain broker/dealers executing the
Fund's portfolio transactions pay all or a portion of the Fund's custodian
fees or transfer agency expenses, or (ii) fees received in connection with
the lending of portfolio securities are used to reduced custodian fees.
These arrangements are not anticipated to materially increase the brokerage
commissions paid by the Fund. For the fiscal year ended October 31, 1994,
without such reductions, "Other expenses" for the Fund would have been 0.57%
for Class A shares and 0.57% for Class B shares. See "Management" herein and
in the Statement of Additional Information for more information. THE
"HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF 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.
** Formerly, the name of the Fund was G.T. Latin America Growth Fund.
Prospectus Page 9
<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, 1994, 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++
CLASS B+ ---------------------------------------------------------
----------------------------------- MAY 18, 1992
APRIL 1, 1993 (COMMENCEMENT OF
YEAR ENDED TO YEAR ENDED YEAR ENDED OPERATIONS)
OCTOBER 31, 1994 OCTOBER 31, 1993 OCTOBER 31, 1994 OCTOBER 31, 1993 TO OCTOBER 31, 1992
---------------- ---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of
year............................ $ 14.39 $ 11.47 $ 14.42 $ 11.10 $ 11.43
---------------- -------- ---------------- ---------------- --------
Income from investment operations:
Net investment income (loss)...... (0.12) 0.00** (0.02) 0.02* 0.07*
Net realized and unrealized gain
(loss) on investments........... 4.67 2.92 4.68 3.38 (0.40)
---------------- -------- ---------------- ---------------- --------
Net increase (decrease) from
investment operations........... 4.55 2.92 4.66 3.40 (0.33)
---------------- -------- ---------------- ---------------- --------
Distributions:
Net investment income........... (0.00) (0.00) (0.01) (0.08) (0.00)
Net realized gain on
investments.................... (0.26) (0.00) (0.26) (0.00) (0.00)
---------------- -------- ---------------- ---------------- --------
Total distributions........... (0.26) (0.00) (0.27) (0.08) (0.00)
---------------- -------- ---------------- ---------------- --------
Net asset value, end of year...... $ 18.68 $ 14.39 $ 18.81 $ 14.42 $ 11.10
---------------- -------- ---------------- ---------------- --------
---------------- -------- ---------------- ---------------- --------
Total investment return (c)....... 31.77% 25.5%(a) 32.58% 30.9% (2.9)%(a)
---------------- -------- ---------------- ---------------- --------
---------------- -------- ---------------- ---------------- --------
Ratios and supplemental data:
Net assets, end of year (in
000's).......................... $291,289 $32,318 $417,322 $187,808 $84,558
Ratio of net investment income
(loss) to average net assets.... (0.61)% (0.4)%**(b) (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net
assets before expense
reductions...................... 2.58% 2.08%
Ratio of expenses to average net
assets.......................... 2.56% 2.9%**(b) 2.06% 2.4%* 2.4%*(b)
Portfolio turnover rate +++....... 100% 99% 100% 99% 32%(b)
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund Class A shares
operating expenses of $0.02 for the year ended October 31, 1993 and for the
period from May 18, 1992 (commencement of operations) to October 31, 1992.
Without such reimbursement, the expense ratios would have been 2.61% and
2.91% and the ratio of net investment income to average net assets would
have been 0.36% and 1.21% for the year ended October 31, 1993 and for the
period from May 18, 1992 (commencement of operations) to October 31, 1992,
respectively.
** Includes reimbursement by LGT Asset Management of Fund Class B shares
operating expenses of $0.02. Without such reimbursement, the expense ratio
would have been 3.63% and the ratio of net investment income to average net
assets would have been (0.76)%.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
Prospectus Page 10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
CLASS B+
-----------------------------------------
APRIL 1, 1993
YEAR ENDED TO
OCTOBER 31, 1994(A) OCTOBER 31, 1993(A)
------------------- -------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
year.............................. $19.75 $16.26
---------- --------
Income from investment operations:
Net investment income (loss)........ (0.22) (0.07)
Net realized and unrealized gain
(loss) on investments............. 6.74 3.56
---------- --------
Net increase (decrease) from
investment operations............. 6.52 3.49
---------- --------
Distributions:
Net investment income............. (0.18) (0.00)
Net realized gain on
investments...................... (0.15) (0.00)
---------- --------
Total distributions............. (0.33) (0.00)
---------- --------
Net asset value, end of year........ $25.94 $19.75
---------- --------
---------- --------
Total investment return (d)......... 33.33% 21.5%(a)
---------- --------
---------- --------
Ratios and supplemental data:
Net assets, end of year (in
000's)............................ $211,673 $13,576
Ratio of net investment income
(loss) to average net assets...... (0.79)% (0.7)%(c)
Ratio of expenses to average net
assets before expense
reductions........................ 2.54%
Ratio of expenses to average
net assets........................ 2.54% 2.9%(c)
Portfolio turnover rate +++......... 155% 112%
<CAPTION>
CLASS A++
--------------------------------------------------------
AUGUST 13, 1991
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
----------------------------------- TO OCTOBER 31,
1994(A) 1993(A) 1992 1991
---------- ---------- --------- ------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
year.............................. $19.78 $15.59 $16.45 $14.29
---------- ---------- --------- ----------
Income from investment operations:
Net investment income (loss)........ (0.08) 0.18* 0.25* 0.01*
Net realized and unrealized gain
(loss) on investments............. 6.75 5.21 (0.98) 2.15
---------- ---------- --------- ----------
Net increase (decrease) from
investment operations............. 6.67 5.39 (0.73) 2.16
---------- ---------- --------- ----------
Distributions:
Net investment income............. (0.19) (0.12) (0.13) (0.00)
Net realized gain on
investments...................... (0.15) (1.08) (0.00) (0.00)
---------- ---------- --------- ----------
Total distributions............. (0.34) (1.20) (0.13) (0.00)
---------- ---------- --------- ----------
Net asset value, end of year........ $26.11 $19.78 $15.59 $16.45
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Total investment return (d)......... 34.10% 37.1% (4.5)% 15.1%(a)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Ratios and supplemental data:
Net assets, end of year (in
000's)............................ $ 336,960 $ 129,280 $ 94,085 $125,038
Ratio of net investment income
(loss) to average net assets...... (0.29)% 1.3%* 1.3%* 1.2%*(b)
Ratio of expenses to average net
assets before expense
reductions........................ 2.04%
Ratio of expenses to average
net assets........................ 2.04% 2.4%* 2.4%* 2.4%*(b)
Portfolio turnover rate +++......... 155% 112% 159% none
</TABLE>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund Class A operating
expenses of $0.02, $0.04 and $0.01 for the years ended October 31, 1993 and
1992 and for the period from August 13, 1991 to October 31, 1991,
respectively. Without such reimbursements, the expense ratios for Class A
would have been 2.49%, 2.62% and 3.42% and the ratios of net investment
income to average net assets would have been 1.25%, 1.07% and 0.l5% for the
years ended October 31, 1993 and 1992 and for the period from August 31,
1991 to October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
Prospectus Page 11
<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 portfolio of investments of that Fund
and have the same rights, except that each class bears the separate expenses of
its Rule 12b-1 distribution plan and has exclusive voting rights with respect to
such plan, and each class has a separate exchange privilege. See "Management"
and "How to 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.
Dividends and other distributions paid by each Fund with respect to its Class A
and Class B shares are calculated in the same manner and at the same time. The
per share dividends on Class B shares of a Fund will be lower than the per share
dividends on Class A shares of that Fund as a result of the higher service and
distribution fees applicable with respect to Class B shares.
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 investors pay a contingent deferred sales charge of up to 5% of the lesser
of the original purchase price or the net asset value of such shares at the time
of redemption. This deferred sales charge is waived for certain redemptions and
is reduced for shares held more than one year. The higher service and
distribution fees paid by the Class B shares of a Fund will cause that class to
have a higher expense ratio and to pay lower dividends 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'
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 will bear higher expenses. Investors
who expect to maintain their investment in a Fund over the long-term but do not
qualify for a reduced initial sales charge might elect the Class A initial sales
charge alternative because 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.
Prospectus Page 12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
The "Hypothetical Example of Effect of Expenses" under "Prospectus Summary"
shows for each Fund the cumulative expenses an investor would pay over time on a
hypothetical investment in each class of each Fund's shares, assuming an annual
return of 5%.
REDUCED SALES CHARGES. Class A share purchases over $50,000 and Class A share
purchases made under a Fund's reduced sales charge plans may be made at a
reduced initial sales charge. Purchases of $500,000 or more must be for Class A
shares. See "How to Invest" for a complete list of reduced sales charges
applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund may be waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in a Fund. The contingent deferred
sales charge may be waived upon redemption of certain Class B shares. Investors
eligible for complete initial sales charge waivers should purchase Class A
shares. See "How to Invest" for a complete list of initial sales charge waivers
applicable to Class A purchases and contingent deferred sales charge waivers
applicable to Class B purchases. A 1% contingent deferred sales charge is
imposed on certain redemptions of Class A shares on which no initial sales
charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of Fund shares.
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
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.
See "How to Invest," "How to Redeem Shares" and "Management" for a more complete
description of the initial and contingent deferred sales charges, service fees
and distribution fees for Class A and Class B shares of each Fund and
"Dividends, Other Distributions and Federal Income Taxation" and "Valuation of
Shares" for other differences between these two classes.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock and rights and warrants to acquire such securities and
substantially similar forms of equity with comparable risk characteristics.
These securities may be listed on securities exchanges, traded in various
over-the-counter ("OTC") markets, or have no organized market.
For purposes of the Emerging Markets Fund's operations, "emerging markets" will
consist of all countries determined by 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
Prospectus Page 13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 Malaysia
Bolivia Mauritius
Botswana Mexico
Brazil Morocco
Chile Nigeria
China Pakistan
Colombia Peru
Cyprus Philippines
Czech Republic Poland
Ecuador Portugal
Egypt Singapore
Ghana Slovakia
Greece Slovak Republic
Hong Kong South Korea
Hungary Sri Lanka
India Swaziland
Indonesia Taiwan
Israel Thailand
Jamaica Turkey
Jordan Uruguay
Kenya Venezuela
Zimbabwe
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment pursuant to the above described 65% of total assets
investment policy, the Emerging Markets Fund will not be invested in all such
markets at all times. Moreover, investing in some of those markets currently may
not be desirable or feasible, due to the lack of adequate custody arrangements
for the Emerging Markets Fund's assets, overly burdensome repatriation and
similar restrictions, the lack of organized and liquid securities markets,
unacceptable political risks or for other reasons.
As used in this Prospectus, a company in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenue from either goods produced, sales made or services
performed in emerging markets; or (iii) organized under the laws of, and with a
principal office in, an emerging market.
In managing the Emerging Markets Fund, 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.
INVESTMENTS IN DEBT SECURITIES. Capital appreciation in debt securities in which
the Emerging Markets Fund invests may arise as a result of favorable changes in
relative foreign exchange rates, in relative interest rate levels and/or in the
creditworthiness of issuers. The receipt of income from debt securities owned by
the Emerging Markets Fund is incidental to the Emerging Markets Fund's objective
of long-term growth of capital.
The Emerging Markets Fund may invest in debt securities of both governmental and
corporate issuers in emerging markets. Emerging market debt securities often are
rated below investment grade. "Investment grade" debt securities are those rated
within the four highest ratings categories of S&P or Moody's or, if unrated,
determined by LGT Asset Management to be of comparable quality. Securities rated
BBB by S&P and Baa by Moody's
Prospectus Page 14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
are investment grade debt securities but are considered to have speculative
characteristics. Many emerging market debt securities are not rated by U.S.
ratings agencies. The Emerging Markets Fund may also use instruments (including
forward contracts) often referred to as "derivatives." See "Options, Futures and
Forward Currency Transactions."
The Emerging Markets Fund will not invest more than 20% of its total assets in
debt securities rated below investment grade. Investment in non-investment grade
debt securities involves a high degree of risk and can be speculative. These
debt securities are the equivalent of high yield, high risk bonds, commonly
known as "junk bonds." See "Risk Factors" for a more complete discussion.
If the rating of any of the Emerging Markets Fund's investments drops below a
minimum rating considered acceptable by 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. Certain emerging markets
are closed in whole or in part to equity investments by foreigners. The Emerging
Markets Fund may be able to invest in such markets solely or primarily through
governmentally authorized investment vehicles or companies. Pursuant to the 1940
Act, The Emerging Markets Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company, as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the 1940 Act and market availability. The
Emerging Markets Fund does not intend to invest in such investment companies
unless, in the judgment of 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. The Emerging Markets Fund has the flexibility to
respond promptly to changes in market and economic conditions. 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. Pursuant to such a defensive strategy, the Emerging
Markets Fund temporarily may hold cash (U.S. dollars, foreign currencies,
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers,
and most or all of the Emerging Markets Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Emerging
Markets Fund adopts a temporary defensive posture, it will not be invested so as
to achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of Emerging Markets
Fund shares or to meet ordinary daily cash needs, the Emerging Markets Fund
temporarily may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest any portion of its assets in money market
instruments.
The Emerging Markets Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Fund may not
invest more than 25% of its total assets in bank securities; (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.
The Emerging Markets Fund may invest in commercial paper rated as low as A-3 by
S&P or P-3 by Moody's or, if unrated, determined by LGT Asset
Prospectus Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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.
SECURITIES LENDING. The Emerging Markets Fund is authorized to make loans of its
portfolio securities to broker/dealers or to other institutional investors. At
all times a loan is outstanding, the Emerging Markets Fund requires the borrower
to maintain with the Emerging Markets Fund's custodian collateral consisting of
cash, U.S. government securities or other liquid, high grade debt securities at
least equal to the value of the borrowed securities, plus any accrued interest.
The Emerging Markets Fund will receive any interest paid on the loaned
securities and a fee and/or a portion of the interest earned on the collateral.
The Emerging Markets Fund will limit its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the loaned securities or possible loss of rights in
the collateral should the borrower fail financially.
LATIN AMERICA GROWTH FUND
The Latin America Growth Fund's investment objective is capital appreciation.
The Latin America Growth Fund normally invests at least 65% of its total assets
in a broad range of securities of Latin American issuers. Though the Latin
America Growth Fund may invest throughout Latin America, under current market
conditions the Latin America Growth Fund expects to invest primarily in equity
and debt securities issued by companies and governments in Mexico, Chile, Brazil
and Argentina.
Consistent with its investment objective and policies, the Latin America Growth
Fund may invest in common stock, preferred stock, rights, warrants and
securities convertible into common stock, and other substantially similar forms
of equity with comparable risk characteristics, as well as bonds, notes,
debentures or other forms of indebtedness that may be developed in the future.
These securities may be listed on securities exchanges, traded 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 as
the following: (a) securities of companies organized under the laws of, or with
a principal office located in a Latin American country or for which the
principal trading market is in Latin America; (b) securities issued or
guaranteed by the government of a country in Latin America, its agencies or
instrumentalities, or municipalities, or the central bank of such country; (c)
dollar-denominated securities or securities denominated in a Latin American
currency issued by companies to finance operations in Latin America; (d)
securities of companies that derive at least 50% of their revenues from either
goods or services produced in Latin America or sales made in Latin America; and
(e) securities of Latin American issuers, as defined herein, in the form of
depositary shares. For purposes of the foregoing definition, the Latin America
Growth Fund's purchases of securities issued by companies outside of Latin
America to finance their Latin American operations will be limited to securities
the performance of which is materially related to such company's Latin American
activities. For purposes of this Prospectus, unless otherwise indicated, the
Latin America Growth Fund defines Latin America to consist of the following
countries: Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Dominican
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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 as to where the
greatest investment opportunities then lie. In allocating investments among the
various Latin American markets, 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 intends to
focus its investments in securities in Mexico, Chile, Brazil and Argentina,
which currently have the most developed capital markets in Latin America. The
Latin America Growth Fund may invest more than 25% of its total assets in any of
these four countries but does not expect to invest more than 50% of its total
assets in any one country.
The portion of the Latin America Growth Fund's total assets invested directly in
Chile may be less than the portions invested in other Latin American countries,
particularly Mexico, because, at present, with limited exceptions, capital
invested directly in Chile normally cannot be repatriated for at least one year.
In addition, repatriation restrictions apply to investments made under the debt
conversion programs in some countries.
Normally, the Latin America Growth Fund will invest a majority of its assets in
equity securities. The percentage distribution between equity and debt will vary
from country to country. The following factors, among others, will influence the
proportion of the Latin America Growth Fund's assets to be invested in equity
versus debt: level and anticipated direction of interest rates; expected rates
of economic growth and corporate profits growth; changes in Latin American
government policy including regulation governing industry, trade, financial
markets, foreign and domestic investment; substance and likely development of
government finances; and the condition of the balance of payments and changes in
the terms of trade.
Under normal circumstances, the Latin America Growth Fund may invest up to 35%
of its total assets in a combination of equity and debt securities of U.S.
issuers. In evaluating investments in securities of U.S. issuers, 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.
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
intends initially to limit most of its Chilean investments to indirect
investments through American Depositary Receipts ("ADRs") and established
Chilean investment companies, the shares of which are not subject to
repatriation restrictions. Accordingly, as a result of the current limitations
on investment by the Latin America Growth Fund in securities of other investment
companies described below, the Fund's investment in Chile would not likely
exceed 15% of its total assets.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. There
is no limitation on the percentage of the Latin America Growth Fund's assets
which may be invested in debt securities which are rated BB or lower by S&P or
Ba or lower by Moody's or, if unrated, are deemed by 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." The Latin America Growth Fund may also use instruments
(including forward contracts) often referred to as "derivatives." See "Options,
Futures and Forward Currency Transactions."
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GT GLOBAL LATIN AMERICA GROWTH FUND
During 1990, the Mexican external debt markets experienced significant changes
with the completion of the "Brady Plan" restructurings in those markets. The
restructurings provided for the exchange of loans and cash for newly issued
bonds ("Brady Bonds"). Brady Bonds fall into two categories: collateralized
Brady Bonds and bearer Brady Bonds. Both types of Brady Bonds are issued in
various currencies, primarily the U.S. dollar. Brady Bonds are actively traded
in the OTC secondary market for Latin American debt. U.S. dollar-denominated
collateralized bonds, which may be fixed par bonds or floating rate discount
bonds, are collateralized in full as to principal by U.S. Treasury Zero Coupon
bonds having the same maturity. At least one year of rolling interest payments
are collateralized by cash or other investments. Brady Bonds have been issued by
Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Jordan, Mexico,
Nigeria, Philippines, Poland, Uruguay, Venezuela and are expected to be issued
by Ecuador and other emerging market countries. Approximately $136 billion in
principal amount of Brady Bonds are outstanding, the largest proportion having
been issued by Brazil and Argentina. Brady Bonds issued by Brazil and Argentina
currently are rated below investment grade.
INVESTMENT IN OTHER INVESTMENT COMPANIES
OR VEHICLES. Under the 1940 Act, the Latin America Growth Fund generally may
invest up to 10% of its total assets in shares of other investment companies and
up to 5% of its total assets in any one investment company, or acquire up to 3%
of the voting stock of any one investment company. Investment in other
investment companies or vehicles may be the most practical or only manner in
which the Latin America Growth Fund can participate in certain Latin American
securities markets. Such investment may involve the payment of substantial
premiums above the value of such issuers' portfolio securities, and is subject
to limitations under the 1940 Act and market availability. There can be no
assurance that vehicles for investing in certain Latin American countries will
be available for investment, particularly in the early stages of the Latin
America Growth Fund's operations. The Latin America Growth Fund does not intend
to invest in such vehicles or funds unless, in the judgment of 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 hold cash
(U.S. dollars, foreign currencies, multinational units) and/or invest up to 100%
of its total assets in money market securities (as defined herein) to generate
income to defray Latin America Growth Fund expenses, for temporary defensive
purposes and pending investment in accordance with the Latin America Growth
Fund's investment objective and policies. In addition, the Latin America Growth
Fund reserves the right to be primarily invested in U.S. securities for
temporary defensive purposes or pending investment of the proceeds of sales of
new shares of the Fund. The Latin America Growth Fund may assume a temporary
defensive position when, due to political, market or other factors broadly
affecting Latin American markets, 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.
Money market securities are defined as short-term debt securities (less than 12
months to maturity) denominated in U.S. dollars or in the currency of any Latin
American country, which consist of: (a) obligations issued or guaranteed by (i)
the U.S. government or the government of a Latin American country, their
agencies or instrumentalities, or municipalities or (ii) international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development ("supranational entities"); (b)
finance company obligations, corporate commercial paper and other short-term
commercial obligations; (c) bank obligations (including certificates of deposit,
time deposits, demand deposits and bankers' acceptances), subject to the
restriction that the Latin America Growth Fund may not invest more than 25% of
its total assets in bank securities; (d) repurchase agreements with respect to
the foregoing; and (e) other substantially similar short-term debt securities
with comparable risk characteristics.
The Latin America Growth Fund may invest in commercial paper rated as low as A-3
by S&P or P-3 by Moody's. Such obligations are considered to have an acceptable
capacity for timely repayment.
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GT GLOBAL LATIN AMERICA GROWTH FUND
However, these securities may be more vulnerable to adverse effects or changes
in circumstances than obligations carrying higher designations.
The banks whose obligations may be purchased by the Latin America Growth Fund
and the banks and broker/dealers with whom the Latin America Growth Fund may
enter into repurchase agreements (as defined below) include any member bank of
the Federal Reserve System, and any broker/ dealer or any foreign bank whose
creditworthiness has been determined by 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
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which the
Emerging Markets Fund or the Latin America Growth Fund purchases a security from
a bank or recognized securities dealer and simultaneously commits to resell that
security to the bank or dealer at an agreed-upon price, date and market rate of
interest separate from the coupon rate and maturity of the purchased security.
The Latin America Growth Fund and the Emerging Markets Fund will invest only in
repurchase agreements collateralized at all times in an amount at least equal to
the repurchase price plus accrued interest. To the extent that the proceeds from
any sale of such collateral upon a default in the obligation to repurchase were
less than the repurchase price, the Latin America Growth Fund or the Emerging
Markets Fund would suffer a loss. The Latin America Growth Fund and the Emerging
Markets Fund will enter into repurchase agreements only with banks and broker/
dealers believed by LGT Asset Management to present minimal credit risks in
accordance with guidelines approved 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. See "Investment Objectives
and Policies -- Repurchase Agreements" in the Funds' Statements of Additional
Information.
PRIVATIZATIONS. The governments in some emerging markets and Latin American
countries have been engaged in programs of selling part or all of their 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 Emerging Markets Fund
and Latin America Growth Fund in privatizations in appropriate circumstances. In
certain emerging markets and Latin American countries, the ability of foreign
entities such as the Emerging Markets Fund and Latin America Growth Fund to
participate in privatizations may be limited by local law and/or the terms on
which the Emerging Markets Fund and Latin America Growth Fund may be permitted
to participate may be less advantageous than those afforded local investors.
There can be no assurance that Latin American governments and governments in
emerging markets will continue to sell companies currently owned or controlled
by them or that privatization programs will be successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Emerging Markets Fund and the
Latin America Growth Fund may purchase debt securities on a "when-issued" basis
and may purchase or sell such securities on a "forward commitment" basis in
order to hedge against anticipated changes in interest rates and prices. The
price, which is generally expressed in yield terms, is fixed at the time the
commitment is made, but delivery and payment for the securities take place at a
later date. When-issued securities and forward commitments may be sold prior to
the settlement date, but the Funds will enter into when-issued and forward
commitments only with the intention of actually receiving or delivering the
securities, as the case may be. No income accrues on securities which have been
purchased pursuant to a forward commitment or on a when-issued basis prior to
delivery to the Emerging Markets Fund or the Latin America Growth Fund. If the
Emerging Markets Fund or the Latin America Growth Fund disposes of the right to
acquire a when-issued security prior to its acquisition or disposes of its right
to deliver or receive against a forward commitment, it may incur a gain or loss.
At the time the Emerging Markets Fund or the Latin America Growth Fund enters
into a
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GT GLOBAL LATIN AMERICA GROWTH FUND
transaction on a when-issued or forward commitment basis, a segregated account
consisting of cash or high grade liquid debt securities equal to the value of
the when-issued or forward commitment securities will be established and
maintained with that Fund's custodian bank and will be marked to market daily.
There is a risk that the securities may not be delivered and that the Funds may
incur a loss. The Emerging Markets and the Latin America Growth Fund also may
enter into reverse repurchase agreements, although (i) the Emerging Markets Fund
currently does not intend to do so and (ii) the Latin America Growth Fund may
not enter into such agreements, with respect to more than 5% of its total
assets.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. In seeking to protect
against the effect of adverse changes in the financial markets in which the
Emerging Markets Fund and the Latin America Growth Fund invests, or against
currency exchange rate or interest rate changes that are adverse to the present
or prospective positions of the Emerging Markets Fund and the Latin America
Growth Fund, both Funds may use forward currency contracts, options on
securities, options on indices, options on currencies, and futures contracts and
options on futures contracts on U.S. and foreign government securities and
currencies. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). Each Fund may enter into such instruments up to the full
value of its portfolio assets. There can be no assurance that a Fund's risk
management policies will succeed. These techniques are described below and are
further detailed in the Statement of Additional Information.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets and most Latin
American markets, to securities denominated in such currencies or to securities
of issuers domiciled or principally engaged in business in such emerging
markets. To the extent that such a market does not exist, 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 Emerging Markets Fund and the Latin America Growth Fund may write and
purchase put and call options on securities, indices and currencies that are
traded on recognized securities exchanges and on over-the-counter ("OTC")
markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), have the effect of limiting the extent to which the Emerging Markets
Fund and the Latin America Growth Fund may enter into forward contracts or
futures contracts, or engage in options transactions. See "Taxes" in the
Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Emerging Markets Fund and the Latin America Growth Fund may
enter into forward currency contracts for the purchase or sale of a specified
currency at a specified future date. Such contracts may involve the purchase or
sale of a foreign currency against the U.S. dollar or may involve two foreign
currencies. The Emerging Markets Fund and the Latin America Growth Fund may each
enter into forward currency contracts either with respect to specific
transactions or with respect to its portfolio positions. For example, when the
Emerging Markets Fund or the Latin America Growth Fund anticipates making a
purchase or sale of a security, it may enter into a forward currency contract in
order to set the rate (either relative to the U.S. dollar or another currency)
at which a currency exchange
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GT GLOBAL LATIN AMERICA GROWTH FUND
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 Emerging Markets Fund or the Latin America
Growth Fund 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 Emerging Markets
Fund and the Latin America Growth Fund 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 Emerging
Markets Fund and the Latin America Growth Fund 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 segregate securities in connection with hedging transactions; and
(6) the possible need of a Fund to defer closing out of certain options, futures
contracts and options thereon and forward currency contracts in order to qualify
or continue to qualify for the beneficial tax treatment afforded regulated
investment companies under the Code. See "Dividends, Other Distributions and
Federal Income Taxation" herein and "Taxes" in the Statement of Additional
Information. If 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
Emerging Markets Fund and the Latin America Growth Fund may each also conduct
its foreign currency exchange transactions on a spot (I.E., cash) basis at the
spot rate prevailing in the foreign currency exchange market.
Prospectus Page 21
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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 in emerging
markets may enable the Emerging Markets Fund to achieve results superior to
those produced by mutual funds with similar objectives to those of the Emerging
Markets Fund that invest solely in equity securities of issuers domiciled in the
U.S. and/or in other developed markets.
Nonetheless, investing in the Emerging Markets Fund entails a substantial degree
of risk. Because of the special risks associated with investing in emerging
markets, an investment in the Emerging Markets Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Emerging Markets Fund could lose its entire investment in
that market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain countries with emerging markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited.
The securities of non-U.S. issuers generally are not registered with the SEC,
nor are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. The Emerging Markets Fund's
net investment income and/or capital gains from its foreign investment
activities may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different
Prospectus Page 22
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GT GLOBAL LATIN AMERICA GROWTH FUND
settlement and clearance procedures. In certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. The inability of
the Emerging Markets Fund to make intended securities purchases due to
settlement problems could cause the Emerging Markets Fund to miss attractive
investment opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Emerging Markets Fund
due to subsequent declines in value of the portfolio security or, if the
Emerging Markets Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Emerging Markets Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Emerging Markets
Fund, to suspend redemption of its shares for any period during which an
emergency exists, as determined by the SEC. Accordingly, when the Emerging
Markets Fund believes that circumstances dictate, it will promptly apply to the
SEC for a determination that such an emergency exists within the naming of
Section 22(e) of the 1940 Act. During the period commencing from the Emerging
Markets Fund's identification of such conditions until the date of any SEC
action, the Emerging Markets Fund's portfolio securities in the affected markets
will be valued at fair value determined in good faith by or under the direction
of the Company's Board of Directors.
LATIN AMERICA GROWTH FUND. Pursuant to the 1940 Act, the Latin America Growth
Fund's classification as a non-diversified investment company allows it, with
respect to 50% of its assets, to invest more than 5% of its total assets in the
securities of any issuer. Consequently, as the Latin America Growth Fund will be
invested in the securities of a limited number of Latin American issuers, the
performance of any single issuer may have a more significant effect upon the
overall performance of the Latin America Growth Fund than if the Latin America
Growth Fund was a diversified investment company.
The Latin America Growth Fund normally invests at least 65% of its total assets
in the securities of Latin American issuers. Accordingly, an investment in the
Latin America Growth Fund requires consideration of certain factors not
typically associated with investing in most U.S. issuers.
Investing in securities of Latin American issuers may entail risks relating to
the potential political and economic instability of certain Latin American
countries and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Latin America Growth Fund could lose its entire
investment in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Accordingly, when the Latin America
Growth Fund believes that circumstances dictate, it will follow the procedures
as described above concerning the Emerging Markets Fund.
The Latin America Growth Fund may not invest more than 10% of its net assets in
illiquid securities. The Latin America Growth Fund will treat any Latin American
securities that are subject to restrictions on repatriation for more than seven
days, as well as any securities issued in connection with Latin American debt
conversion programs that are restricted as to remittance of invested capital or
Prospectus Page 23
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GT GLOBAL LATIN AMERICA GROWTH FUND
profits, as illiquid securities for purposes of this limitation. The Latin
America Growth Fund will also treat repurchase agreements with maturities in
excess of seven days as illiquid securities.
The Latin America Growth Fund invests in securities denominated in currencies of
Latin American countries. Accordingly, changes in the value of these currencies
against the U.S. dollar will result in corresponding changes in the U.S. dollar
value of the Latin America Growth Fund's assets denominated in those currencies.
Such changes will also affect the Latin America Growth Fund's income.
In addition, many of the currencies of Latin American countries have experienced
steady devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries.
Some Latin American countries also may have managed currencies which are not
free floating against the U.S. dollar. In addition, there is a risk that certain
Latin American countries may restrict the free conversion of their currencies
into other currencies. Further, certain Latin American currencies may not be
internationally traded. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Latin America Growth Fund's portfolio securities are denominated may
have a detrimental impact on the Latin America Growth Fund.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain Latin American
countries.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Expropriation, confiscatory
taxation, nationalization, political, economic or social instability or other
developments could adversely affect the assets of the Latin America Growth Fund
held in particular Latin American countries. Furthermore, certain Latin American
countries may impose withholding taxes on dividends payable to the Latin America
Growth Fund at a higher rate than those imposed by other foreign countries. This
may reduce the Latin America Growth Fund's investment income available for
distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. Currently, Brazil is the largest debtor among
developing countries, Mexico is the second largest and Argentina the third. At
times certain Latin American countries have declared moratoria on the payment of
principal and/or interest on external debt.
Investment in Sovereign Debt involves a high degree of risk. The issuers or
governmental authorities that control the repayment of Sovereign Debt may not be
able or willing to make principal and/or interest payments when due in
accordance with the terms of such debt. Investors should be aware that the
Sovereign Debt instruments in which the Latin America Growth Fund may invest
involve great risk and are deemed to be the equivalent in terms of quality to
securities rated below investment grade by Moody's and S&P. A substantial
portion of the Sovereign Debt in which the Fund will invest, including Brady
Bonds, is issued as part of debt restructurings and such debt is to be
considered speculative. There is a history of defaults with respect to
commercial bank loans by public and private entities issuing Brady Bonds.
The Latin America Growth Fund and 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
Prospectus Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
interest rates. If interest rates in a market fall, the Funds' debt securities
issued by governments or companies in that market ordinarily will rise. If
market interest rates increase, however, the debt securities owned by the Funds
in that market will be likely to decrease in value.
As discussed above, the Emerging Markets Fund may invest up to 20% of its total
assets in debt securities rated below investment grade and the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. Such
investments involve a high degree of risk.
Debt rated BB, B, CCC, CC and C and debt rated Ba, B, Caa, Ca, C is regarded by
S&P and Moody's, respectively, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. For S&P, BB indicates the lowest
degree of speculation and C the highest degree of speculation. For Moody's, Ba
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Similarly, debt rated Ba or BB and below is
regarded by the relevant rating agency as speculative. Debt rated C by Moody's
or S&P is the lowest rated debt that is not in default as to principal or
interest and such issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing. Such securities are
also generally considered to be subject to greater risk than securities with
higher ratings with regard to a deterioration of general economic conditions.
These foreign debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market and Latin American governments
that issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank and may not be able or willing to make principal and/or interest
repayments as they come due. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and are often subordinated to other creditors
of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Funds. In
addition, the Funds may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and either Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Funds to obtain accurate market quotations for purposes of
valuing the Funds' portfolios. The Funds may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
Prospectus Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
The Funds may also incur additional expenses to the extent either is required to
seek recovery upon a default in the payment of principal or interest on its
portfolio holdings, and the Funds may have limited legal recourse in the event
of a default. Debt securities issued by governments in emerging or Latin
American markets can differ from debt obligations issued by private entities in
that remedies from defaults generally must be pursued in the courts of the
defaulting government, and legal recourse is therefore somewhat diminished.
Political conditions, in terms of a government's willingness to meet the terms
of its debt obligations, also are of considerable significance. There can be no
assurance that the holders of commercial bank debt may not contest payments to
the holders of debt securities issued by governments in emerging or Latin
American markets in the event of default by the governments under commercial
bank loan agreements.
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 Latin America Growth Fund's and Emerging Markets Fund's
annual operating expenses, which are higher than those of many other investment
companies of comparable size, are believed by each Fund's management to be
comparable to expenses of other open-end management investment companies that
invest primarily in the securities of countries in a single geographic region or
regions.
The investment objective of the Latin America Growth Fund and of the Emerging
Markets Fund may not be changed without the approval of a majority of the
respective Fund's outstanding voting securities. As defined in the 1940 Act and
as used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented, or (ii) more
than 50% of the outstanding shares. In addition, the Latin America Growth Fund
and the Emerging Markets Fund each have adopted certain investment limitations
as fundamental policies which also may not be changed without shareholder
approval. A complete description of these limitations is included in the
Statement of Additional Information. Unless specifically noted, the Latin
America Growth Fund's and the Emerging Markets Fund's investment policies
described in this Prospectus and in the Statement of Additional Information are
not fundamental policies which may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval. See "Investment
Limitations" in the Statement of Additional Information.
Prospectus Page 26
<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.
Investors known to be eligible to purchase Advisor Class shares will be sold
only Advisor Class shares rather than any other class of shares offered by a
Fund. See "Alternative Purchase Plan."
Orders received before the close of regular trading on the New York Stock
Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather, equipment
failure or other factors contribute to an earlier closing time), on any Business
Day will be executed at the public offering price for the applicable class of
shares determined that day. A "Business Day" is any day Monday through Friday on
which the NYSE is open for business. The minimum initial investment is $500
($100 for IRAs and $25 for custodial accounts under Section 403(b)(7) of the
Code and other tax-qualified employer-sponsored retirement accounts, if made
under a systematic investment plan providing for monthly payments of at least
that amount), and the minimum for additional purchases is $100 (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 "How to Invest -- Purchasing Class A Shares." 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 SHARE PURCHASE ORDERS THAT FAIL TO
SPECIFY A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF
$500,000 OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which 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 the Account Application located at the end of 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. 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
Prospectus Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 currently does not charge a service fee for
facilitating wire purchases, but reserves the right to do so in the future.
Investors desiring to open an account by bank wire should call the Transfer
Agent at the appropriate toll free number provided in the Shareholder Account
Manual to obtain an account number and detailed instructions.
PURCHASING CLASS A SHARES
Each Fund's public offering price per Class A share is equal to the net asset
value per share (see "Calculation of Net Asset Value") 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 broker/ dealers that
initiate and are responsible for purchases of any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate brokerage commission to be paid in connection
with the transaction, 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.
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. 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 Keogh-type plan (that is, a self-employed individual
retirement plan ("Keogh Plan")). This also includes purchases made by a company
controlled by such individual(s).
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above.
Or
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
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 or
administrator; employees or retired employees of the companies comprising
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings
Prospectus Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 on account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of 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 current
public offering 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).
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
Prospectus Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 LETTER OF INTENT WILL APPLY ONLY TO CLASS A SHARES OF
THE FUNDS, AND CLASS A SHARES OF OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT
GLOBAL DOLLAR FUND). THE VALUE OF CLASS B SHARES OF ANY GT GLOBAL MUTUAL FUND
WILL NOT BE COUNTED TOWARD THE FULFILLMENT OF AN LOI.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. Purchases of
Class A shares of two or more 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 are
applied to redemptions of Class A shares upon which a contingent deferred sales
charge is imposed. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case may
be, on the amount realized on redemption. The amount of any contingent deferred
sales charge will be paid to 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. 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
Prospectus Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 recognized on the redemption of shares. 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 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
Prospectus Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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. 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 through periods of low price levels.
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 GT Global 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.
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.
Prospectus Page 32
<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."
Other than the Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH 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 AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA 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
- --------------
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 shall not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. The Funds may be liable for any
losses due to unauthorized or fraudulent instructions if they do not follow
reasonable procedures.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker 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 33
<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 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). 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 FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS
Prospectus Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 shall not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions. The Funds may be liable for any losses due
to unauthorized or fraudulent instructions if they do not follow reasonable
procedures.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the 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.
Each 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 or more).
Prospectus Page 35
<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 Funds' 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
(Stating Fund name, class of shares, shareholder's registered name and account
number)
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 36
<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 the Fund's
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund are valued at the last sale price on the
exchange or in the principal OTC market in which such securities are traded, as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid or asked prices for such
securities, or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when 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 will be
valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's Board of Directors. Securities quoted in foreign
currencies will be valued in U.S. dollars based on the prevailing exchange rates
on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC markets which trade on days when the NYSE is closed
(such as Saturday). As a result, the net asset values of the Funds may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of the Fund.
The different expenses borne by each class of shares will result in different
net asset values and dividends. The per share net asset value of the Class B
shares of a Fund generally will be lower than that of the Class A shares of that
Fund because of the higher expenses borne by the Class B shares. It is expected,
however, that the net asset value per share of 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. The per share net asset value and
dividends of the Advisor Class shares of a Fund generally will be higher than
that of the Class A and Class B shares of that Fund because of the absence of
12b-1 service and distribution fees with respect to Advisor Class shares.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
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 normally distributes for each fiscal
year substantially all of its realized net short-term capital gain (the excess
of short-term capital gains over short-term capital losses), net capital gain
(the excess of net long-term capital gain over net short-term capital loss) and
net gains from foreign currency transactions, if any. Each Fund may make an
additional dividend or
Prospectus Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
other distribution if necessary to avoid a 4% excise tax on certain
undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; the per share income
dividends on both such classes of shares of a Fund will be lower than the per
share income dividends on the Advisor Class shares of that Fund as a result of
the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other 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 38
<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 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 a sales charge due to the reinstatement privilege or
exchange privilege. In these cases, any gain on the disposition of the original
Class A shares will be increased, or loss decreased, by the amount of the sales
charge paid when the 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 shares of the same Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
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 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 dividing
the result by the aggregate assets of the GT Global Mutual Funds.
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. On January 1, 1996, G.T. Capital
Management, Inc. was renamed LGT Asset Management, Bank in Liechtenstein was
renamed LGT Bank in Liechtenstein, and BIL GT Group Limited was renamed
Liechtenstein Global Trust. Liechtenstein Global Trust is a provider of global
asset management and
Prospectus Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 November 30, 1995, LGT Asset Management and its worldwide asset management
affiliates managed or administered approximately $22 billion, of which
approximately $20 billion consist of GT Global retail funds worldwide. In the
U.S., as of November 30, 1995, LGT Asset Management managed or administered
approximately $9.6 billion in GT Global Mutual Funds. As of November 30, 1995,
assets under advice by the LGT Bank in Liechtenstein exceeded approximately $23
billion. As of November 30, 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 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>
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.
Consistent with its obligation to obtain the best net results, LGT Asset
Management may consider a broker/dealer's
Prospectus Page 40
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 affiliates.
The Emerging Markets Fund and the Latin America Growth Fund's portfolio turnover
rates during the fiscal year ended October 31, 1994 were 100% and 155%,
respectively. However, LGT Asset Management does not regard portfolio turnover
as a limiting factor and will buy or sell securities for either Fund as
necessary in response to market conditions to meet the Fund's objective. The
portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the Fund's average month-end portfolio
value, excluding short-term investments. For purposes of this calculation,
portfolio securities exclude purchases and sales of debt securities having a
maturity at the date of purchase of one year or less. High portfolio turnover
involves correspondingly greater transaction costs in the form of brokerage
commissions or dealer spreads and other costs that a Fund will bear directly,
and may result in the realization of net capital gains, which are taxable when
distributed to shareholders.
DISTRIBUTION OF FUND SHARES. 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 Liechtenstien 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 reallows a portion of such charges to broker/dealers that have sold
such shares in accordance with the schedule set forth above under "How to
Invest." In addition, GT Global collects any contingent deferred sales charges
that may be imposed on certain redemptions of Class A and 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
Prospectus Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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.
Prospectus Page 42
<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 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. 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. Under certain circumstances,
duplicate mailings of such reports to the same household may be consolidated.
ORGANIZATION. The Company was organized as a Maryland corporation on October 29,
1987. Until April 28, 1989, the name of the Company was G.T. Global Income
Series, Inc. From time to time, the Company may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Company's common stock. Shares of the Emerging Markets Fund and the Latin
America Growth Fund are entitled to one vote per share (with proportional voting
for fractional shares) and are freely transferable. Shareholders have no
preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's Funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
The Company normally will not hold annual meetings of shareholders, except as
required under the 1940 Act. The Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's Funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, three hundred million shares have been classified as
shares of each Fund. One hundred million shares have been classified as Class A
shares of each Fund, one hundred million shares 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
Prospectus Page 43
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 its investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date established by the
Board of Directors.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
Each Fund's performance data reflects past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible differences in calculation
methods should be considered when comparing a Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. A Fund's results also should be considered relative to the
risks associated with its investment objective and policies. Each Fund will
include performance data for all classes shares of the Fund in any advertisement
or information including performance data for such Fund. See "Investment
Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by 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 50
California Street, 27th Floor, San Francisco, California 94111.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's assets and serves as each Fund's
accounting agent.
COUNSEL. The law firm of Kirkpatrick & Lockhart, 1800 M Street, N.W.,
Washington, D.C. 20036-5891, acts as counsel to the Company and the Funds.
Kirkpatrick & Lockhart also acts as
Prospectus Page 44
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 45
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 46
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 47
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 48
<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 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
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X X
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</TABLE>
<PAGE>
<TABLE>
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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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------------------------------------------- --------------------------------------------------
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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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<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>
- --------------------------------------------------------------------------------
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GT GLOBAL
MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
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BANK AUTHORIZATION
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<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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<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 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 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 G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT
FUNDS, INC., GT GLOBAL EMERGING MARKETS FUND, GT 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.
LEMPR60172MC
<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
March 1, 1995
As Revised January 5, 1996
- --------------------------------------------------------------------------------
GT Global Latin America Growth Fund ("Fund") is a non-diversified mutual fund
organized as a separate series of GT 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 March 5, 1995, as revised January
5, 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
- --------------------------------------------------------------------------------
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Page No.
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Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 4
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 21
Management............................................................................................................... 23
Valuation of Shares...................................................................................................... 25
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 32
Description of Debt Ratings.............................................................................................. 39
Financial Statements..................................................................................................... 41
</TABLE>
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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 ("1940 Act")
from purchasing the securities of any foreign company that, in its most recent
fiscal year, derived more than 15% of its gross revenues from securities-related
activities ("securities-related companies"). In a number of Latin American
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The
Securities and Exchange Commission ("SEC") has proposed a rule which, if
adopted, may permit the Fund to invest in certain of these securities subject to
certain restrictions. The Fund has obtained an exemption from the SEC to permit
the Fund to invest in a manner that is consistent with the SEC's proposed rule.
The proposed rule excepts from the prohibition of the 1940 Act any acquisition
by an investment company of securities of securities-related companies provided
that certain percentage limitations are adhered to.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
received in the conversion and on the remittance of profits on the investment
and of the invested capital. The Fund intends to acquire Sovereign Debt, as
defined in the Prospectus, to hold and trade in appropriate circumstances as
described in the Prospectus, as well as to use to participate in Latin American
debt conversion programs. 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 issuers. These securities may not necessarily be denominated in the
same currency as the securities for which they may be exchanged. ADRs and ADSs
are typically issued by an American bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by the Fund in units or attached to
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by vote
of a majority of the Company's Board of Directors without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 25% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
resell the collateral. There is no limitation on the amount of the Fund's assets
that may be subject to repurchase agreements at any given time. The Fund will
not enter into a repurchase agreement with a maturity of more than seven days
if, as a result, more than 10% of the value of its total assets would be
invested in such repurchase agreements and other illiquid investments.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements, which involve the sale of
a security by the Fund and its agreement to repurchase the security at a
specified time and price. However, the Fund does not currently intend to engage
in reverse repurchase agreements with respect to more than 5% of its total
assets. The Fund will maintain, in a segregated amount with a custodian, cash,
U.S. government securities or other liquid, high grade debt securities in an
amount sufficient to cover its obligations under reverse repurchase agreements
with broker/dealers. No segregation is required for reverse repurchase
agreements with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker-dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund will also be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least the current market value of the security sold short. Depending on
arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
- --------------------------------------------------------------------------------
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 ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
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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, the Fund's investment manager, are not expected
to make any major price moves in the near future but that, over the long term,
are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a
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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 (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.
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
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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 offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided by
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the dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.
The Securities and Exchange Commission ("SEC") staff considers purchased OTC
options to be illiquid securities. The Fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund as the call writer will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the
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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
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
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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
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
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than (in the case of a put) the exercise price of the option on the Futures
Contract. If an option is exercised on the last trading day prior to the
expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the closing
level of the securities, currencies or index upon which the Futures Contract is
based on the expiration date. Purchasers of options who fail to exercise their
options prior to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
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GT GLOBAL LATIN AMERICA GROWTH FUND
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts 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.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if
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GT GLOBAL LATIN AMERICA GROWTH FUND
the guidelines so require, set aside cash, U.S. government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or segregated accounts, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in Latin
American countries, any change in the leadership or policies of the governments
of those countries or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse the liberalization of foreign investment policies now
occurring and thereby eliminate any investment opportunities which may currently
exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose a substantial portion of
its investments in such countries. The Fund's investments would similarly be
adversely affected by exchange control regulations in any of those countries.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Fund
invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its total assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than will the sale of liquid securities such as
securities eligible for trading on U.S. securities exchanges or in the over-the-
counter markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the
Securities Act of 1933, are liquid or illiquid. The Board has delegated the
function of making day-to-day determinations of liquidity to 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
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GT GLOBAL LATIN AMERICA GROWTH FUND
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, 1994 the market capitalizations of listed equity securities on
the major exchanges in Argentina, Brazil (Sao Paulo only for market
capitalization), Chile and Mexico were US$24.2 billion, $94.8 billion, $38.8
billion and $108.4 billion. By comparison, at December 31, 1994 the market
capitalization of the NYSE alone was US$4.4 trillion. A high proportion of the
shares of many Latin American companies may be held by a limited number of
persons, which may further limit the number of shares available for investment
by the Fund. A limited number of issuers in most, if not all, Latin American
securities markets may represent a disproportionately large percentage of market
capitalization and trading value. The limited liquidity of Latin American
securities markets also may affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so. In addition, certain Latin
American securities markets, including those of Argentina, Brazil, Chile and
Mexico, are susceptible to being influenced by large investors trading
significant blocks of securities or by large dispositions of securities
resulting from the failure to meet margin calls when due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. The
stock markets in Brazil declined sharply in mid 1989, and closed briefly,
following a large settlement failure. Another significant decline occurred in
the first quarter of 1990. In 1987, the Mexican stock exchange experienced a
severe correction, its index declining over 70 percent. This market volatility
may result in greater volatility in the Fund's net asset value than would be the
case for companies investing in domestic securities. If the Fund were to
experience unexpected net redemptions, it could be forced to sell securities in
its portfolio without regard to investment merit, thereby decreasing the asset
base over which Fund expenses can be spread and possibly reducing the Fund's
rate of return.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or 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
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GT GLOBAL LATIN AMERICA GROWTH FUND
CVM. In addition, the Fund is required to appoint a Brazilian administrator to
perform certain functions with respect to its holdings of Brazilian securities.
CHILE. Direct investment by foreign investors in Chile is subject to certain
Chilean investment restrictions, including a requirement that invested capital
must remain in Chile for a minimum of at least one year. The remittance of
dividends and capital gains can be effected without material restrictions on
timing and amount. Indirect investments, however, may be made through already
established investment funds and such investments will not be subject to the
restriction regarding residency of capital, although they will be subject to the
limitations, described above, regarding investments by the Fund in the
securities of other investment companies. In addition to investing indirectly in
the Chilean market, the Fund may establish its own foreign investment fund in
Chile for which a Chilean administrator will be required. The Fund may also gain
access to investment in Chile via the 8 American Depositary Receipts ("ADRs")
currently traded in the U.S. on the New York Stock Exchange. Another 12 Chilean
companies plan ADR listings in the U.S. in 1994. GT Global believes these events
significantly broaden the Fund's ability to gain access to the Chilean market.
MEXICO. Generally, foreigners may directly acquire shares of Mexican
companies up to a limit of 49 percent of the share capital of the issuer without
prior approval. Foreigners may acquire shares in the share capital of certain
Mexican listed companies usually reserved to Mexican nationals, and may acquire
in excess of the 49 percent limit referred to above, through trust arrangements
with Nacional Financiera, S.N.C. ("Nafin"), the Mexican government development
finance bank. Under this arrangement Nafin will acquire the securities that the
Fund purchases and then issue Ordinary Certificates of Participation ("CEPOS").
As a holder of the CEPOS, the Fund would have all rights of the shares acquired,
but it would not have voting rights. There are no restrictions on the movement
of capital in and out of Mexico. Dividends and capital gains can also be freely
remitted, subject to any withholding tax.
GT Global believes that the Fund may invest a greater percentage of its assets
than previously in Venezuela if political and economic conditions change
materially. The following are relevant foreign investment restrictions relating
to Venezuela.
VENEZUELA. In order to stabilize the country's financial system, the
government suspended foreign exchange trading on July 6, 1994. The market was
"officially" opened July 11, however, the Bolivar did not begin trading until
January 10, 1995 at a level of 212 and 220 (the level held since December 1994).
The Venezuelan Exchange Administration Board issued Resolution No. 41 regarding
foreign investment registration and repatriation for capital dividends and
interest. The Resolution provides that all investment should be registered with
the Superintendency of Foreign Investment (SEIX) and the Technical
Administration Exchange Office (OTAC). Article 2 of the Resolution states that
"investments" is defined as those transactions executed through the local stock
exchange (this prohibits OTC transaction proceeds from being eligible for
repatriation).
Resolution No. 41 also required 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
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GT GLOBAL LATIN AMERICA GROWTH FUND
Statement of Additional Information may be materially affected by restatements
for inflation and may not accurately reflect the real conditions of companies
and securities markets. There is substantially less publicly available
information about foreign companies, including Latin American companies, and the
governments of Latin American countries than there are reports and ratings
published about U.S. companies and the U.S. Government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund under normal circumstances will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. 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.
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GT GLOBAL LATIN AMERICA GROWTH FUND
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates 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.
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."
Statement of Additional Information Page 17
<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; 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;
Statement of Additional Information Page 18
<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 19
<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, 1994,
1993 and 1992, the Fund paid aggregate brokerage commissions of $708,799,
$616,803 and $1,284,114, respectively.
PORTFOLIO TURNOVER AND TRADING
The Fund engages in portfolio trading when 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 anticipates that its annual
portfolio turnover rate should not exceed 100%, but this expectation will not be
a limiting factor when LGT Asset Management deems portfolio changes appropriate.
A 100% portfolio turnover rate would occur if the lesser of the value of
purchases or sales of portfolio securities for the Fund for a year (excluding
purchases of U.S. Treasury and other securities with a maturity at the date of
purchase of one year or less) were equal to 100% of the average monthly value of
the securities, excluding short-term investments, held by the Fund during such
year. Higher portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs that the Fund will bear directly. The
Fund's portfolio turnover rates for the fiscal years ended October 31, 1994 and
1993 were 155% and 112%, respectively.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's By-laws authorize a Board of Directors of between 1 and 25
persons, as fixed by the Board of Directors. Directors normally are elected by
shareholders; however, a majority of remaining Directors may fill Director
vacancies caused by resignation, death or expansion of the Board. The Company's
Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 42 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; Director and President of LGT Asset Management since 1989; Director
President and President of GT Global since 1987; and Director and President of GT Services since
50 California St. 1990. Mr. Minella also is a director or trustee of each of the other investment companies
San Francisco, CA 94111 registered under the 1940 Act that is managed or administered by LGT Asset Management.
C. Derek Anderson, 53 Chairman, Anderson Capital Management, Inc. from 1988 to present; Chairman, Plantagenet
Director Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; Director, American
220 Sansome Street Heritage Group Inc.; Director, T.L. Higgins Inc. and various other companies. Mr. Anderson
Suite 400 also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94104 the 1940 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm) and serves as Director and Chairman of C.D.
Director Stimson Company (a private investment company); Trustee, Seattle Art Museum. Mr. Bayley
2 Embarcadero Center also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94118 the 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 52 Managing Partner of Accel Partners (a venture capital firm). Mr. Patterson also serves as
Director a director of various computing and software companies. Mr. Patterson also is a director
One Embarcadero Center or trustee of each of the other investment companies registered under the 1940 Act that is
Suite 3820 managed or administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 59 Private investor. From 1984 to 1986, Miss Quigley was President of Quigley Friedlander &
Director Co., Inc. (a financial advisory services firm). Ms. Quigley also is a director or trustee
1055 California Street of each of the other investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94108 administered by LGT Asset Management.
F. Christian Wignall, 39 Senior Vice President, Chief Investment Officer - Global Equities and a Director of LGT
Vice President and Chief Investment Asset Management since 1987, and Chairman of the Global Investment Policy Committee of
Officer - affiliated international LGT companies since 1990.
Global Equities
50 California Street
San Francisco, CA 94111
</TABLE>
Statement of Additional Information Page 21
<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>
Gary Kreps, 40 Senior Vice President and Chief Investment Officer - Global Fixed Income of LGT Asset
Vice President and Chief Investment Management and a Director since 1992. Prior to joining LGT Asset Management, Mr. Kreps was
Officer - Global Senior Vice President of the Putnam Companies from 1988 to 1992.
Fixed Income
50 California Street
San Francisco, CA 94111
Helge K. Lee, 48 Senior Vice President, General Counsel and Secretary of LGT Asset Management, GT Global
Vice President and Secretary and GT Services since May, 1994. Mr. Lee was the Senior Vice President, General Counsel
50 California Street and Secretary of Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
San Francisco, CA 94111 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 Vice President - Finance and Administration of LGT Asset Management, GT Global and GT
Vice President and Chief Services since 1994. Prior thereto, Mr. Tufts was Vice President - Finance of LGT Asset
Financial Officer Management and GT Global since 1987; Vice President - Finance of GT Services since 1990;
50 California Street and a Director of LGT Asset Management, GT Global and GT Services since 1991.
San Francisco, CA 94111
Kenneth W. Chancey, 50 Vice President of LGT Asset Management and GT Global since 1992. Mr. Chancey was Vice
Vice President and President of Putnam Fiduciary Trust Company from 1989 to 1992.
Chief Accounting Officer
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Assistant General Counsel of LGT Asset Management, GT Global and GT Services since 1991.
Assistant Secretary From 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus Corporation. Prior thereto,
50 California Street he was associated with Colonial Management Associates, Inc.
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.
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 GT Global Developing Markets
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee of
GT 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 and/or
Trustee and Officer, respectively, of 9 registered investment companies with 38
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 December 31, 1994, the Company paid Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley received Directors' fees and expense
reimbursements of $37,114, $39,425, $31,941 and $33,178, respectively. For the
year ended October 31, 1994, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms.
Quigley who are not directors, officers, or employees of LGT Asset Management or
any affiliated company, received total compensation of $94,511, $99,529, $82,742
and $86,914, respectively, from the 38 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 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 has an initial two-year term with respect to the Fund
from the date of the commencement of Fund operations, and may be renewed for
additional one-year terms thereafter with respect to the Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract was approved with respect to the Fund by the vote of the
Board of Directors of the Company on June 15, 1994. The Management Contract
provides that with respect to the Fund either the Company or 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, 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. Similarly,
$1,348,499 were paid to LGT Asset Management by the Fund for the fiscal year
ended October 31, 1992. During this period LGT Asset Management reimbursed fees
of $302,329 to the Fund with a net payment to LGT Asset Management of
$1,046,170. For the fiscal period August 13, 1991 (commencement of operations)
to October 31, 1991, the Fund paid management and administration fees of $87,137
to LGT Asset Management. However, during that period LGT Asset Management
reimbursed fees of $88,797 to the Fund, with a payment to LGT Asset Management
of $1,660.
Certain Latin American countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION
The Fund's 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. The Distribution Contracts were last approved with respect to the Class
A and Class B shares by the Board of Directors on June 15, 1994.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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, 1994.................................................. $ 1,263,153 $ 1,204,826
</TABLE>
The Plans were last approved on June 15, 1994 by the Company's Board of
Directors, including a majority of Directors who are not "interested persons" of
the Company (as defined in the 1940 Act) and who have no direct or indirect
financial interests in the operation of the Plan or in any agreement related
thereto ("Qualified Directors"). 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,
- ------------------------------------------------------------------------------
1994........................................................................ $ 4,668,275 $ 443,629 $ 4,224,646
1993........................................................................ 558,000 26,490 531,510
1992........................................................................ 460,000 94,505 365,495
</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,
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.
TRANSFER AGENCY 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.
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 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
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of the Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Fund generally
are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of normal trading on The New York
Stock Exchange, Inc. ("NYSE") (currently 4:00 p.m. Eastern time) (unless
weather, equipment failure or other factors contribute to an earlier closing
time) on each day for which the NYSE is open for business. Currently, the NYSE
is closed on weekends and on certain days relating to the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by 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 at the average of the
last bid prices obtained from dealers in the case of OTC options. The value of
each security denominated in a currency other than U.S. dollars will be
translated into U.S. dollars at the prevailing exchange rate as determined by
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 major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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.
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
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 their 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
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
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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%
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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.
The "Tax Simplificiation and Technical Corrections Bill of 1993," passed in May
1994 by the House of Representatives, would substantially modify the taxation of
U.S. shareholders of foreign corporations, including eliminating the provisions
described above dealing with PFICs and replacing them (and other provisions)
with a regulatory scheme involving entities
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
called "passive foreign corporations." Three similar bills were passed by
Congress in 1991 and 1992 and vetoed. It is unclear at this time whether, and in
what form, the proposed modifications may be enacted into law.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, Futures and Forward Contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However, income from
the disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities, (or options and Futures with respect thereto) also will be subject
to the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge 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 an RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies. Each section 988 gain or loss generally is
computed separately and treated as ordinary income or loss. In the case of
overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Fund attempts to monitor
section 988 transactions to minimize any adverse tax impact.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 30
<PAGE>
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; 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. in Singapore; LGT Asset
Management Ltd., formerly G.T. Management (Australia) Ltd., in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
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 31
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return", as referred to in the Prospectus (see
"Performance Information"), is calculated separately for Class A and Class B
shares of the Fund, as follows: Standardized Return ("T") is computed by using
the value at the end of the period ("EV") of a hypothetical initial investment
of $1,000 ("P") over a period of years ("n") according to the following formula
as required by the SEC: P(1+T)(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, 1994,
were as follows:
<TABLE>
<CAPTION>
STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1994............. 27.72%
August 13, 1991 through October 31,
1994................................... 22.57%
</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, 1994............. 28.33%
April 1, 1993 through October 31,
1994................................... 33.46%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted.
As discussed in the Prospectus, the Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted.
The Fund's Non-Standardized Returns, for its Class A shares, stated as aggregate
total returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
AGGREGATE TOTAL
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1994............. 34.10%
August 13, 1991 through October 31,
1994................................... 102.13%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1994............. 33.33%
April 1, 1993 through October 31,
1994................................... 61.94%
</TABLE>
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, 1994, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1994............. 34.10%
August 13, 1991 through October 31,
1994................................... 24.44%
</TABLE>
The Fund's Non-Standardized Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ---------------------------------------- ------------------
<S> <C>
Year ended October 31, 1994............. 33.33%
April 1, 1993 through October 31,
1993................................... 35.58%
</TABLE>
Standardized Returns and Non-Standardized Returns are not presented for the
Advisor Class shares because no shares of that class were outstanding during the
fiscal year ended October 31, 1994.
The Fund's investment results will vary from time to time depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund, so that current or past yield or total return should not be considered
representative of what an investment in the Fund may earn in any future period.
These factors and possible differences in the methods used in calculating
investment results should be considered when comparing the Fund's investment
results with those published for other investment companies and other investment
vehicles. The Fund's results also should be considered relative to the risks
associated with the Fund's investment objective and policies. The Fund will
include performance data for all classes of shares of the Fund in any
advertisement or information including performance data for the Fund.
The Fund and GT Global may from time to time compare the Fund with the
following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service (excluding
Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), and/or other companies that rank
and/or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/ or other factors. In this
regard the Fund may be compared to the Fund's "peer group" as defined by
Lipper, CDA/ Wiesenberger and/or other firms as applicable, or to specific
funds or groups of funds within or without such peer group. Morningstar is a
mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(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 Ratings Group.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a 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
Shearson, S.G. Warburg, Jardine Flemming, Barings Securities, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, performance
rankings, ratings and commentary reported periodically in national financial
publications, included but not limited to Money Magazine, Smart Money, Global
Finance, EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin
Finance, the Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To
Personal Finance, Barron's, The Financial Times, USA Today, The New
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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 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 35
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH 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 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.
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
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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 World
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, GT Guide
to World Equity Markets, Salomon Brothers, Inc., S.G. Warburg and Barings
Securities.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country or market: International Finance Corporation,
GT Guide to World Equity Markets, Salomon Brothers Inc., S.G. Warburg and
Barings Securities.
15) Foreign Direct Investments to developing countries.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries including, but not limited to, electricity, water,
transportation, construction materials, natural resources, financial
services, health care services and supplies, consumer products and services
and telecommunications equipment and services (sources of such information
may include, but would not be limited to, The World Bank, OECD, IMF,
Bloomberg and Datastream).
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: GT
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 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Investment Trust Management Ltd. (Japan) as one of the first
foreign discretionary investment management for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of GT Global 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
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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.
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 invesments 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.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1,"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics: leading market positions
in well-established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Issuers rated Prime-3 have an acceptable ability for
repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP'S ("S&P") ratings of commercial paper are graded
into four categories ranging from "A" for the highest quality obligations to "D"
for the lowest. A -- Issues assigned its highest rating are regarded as having
the greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 -- This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (++) sign
designation. A-2 -- Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." A-3-Issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond because margins of protection may not be as large as in
Aaa securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present which make the long-term
risks appear somewhat larger than the Aaa securities.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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, 1994 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 and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Latin America Growth Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the schedule of portfolio investments, as of
October 31, 1994, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended and for the period from August 13, 1991 (commencement of
operations) to October 31, 1991. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Latin America Growth Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended and for the period from August 13, 1991
(commencement of operations) to October 31, 1991, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Materials/Basic Industries (19.5%)
- -----------------------------------------------
Cementos
Mexicanos, S.A.
de C.V. - Cemex
"B" MEX 1,621,750 $15,073,958 2.7
CEMENT
Companhia Vale do
Rio Doce - CVRD
(Preferred) BRZL 51,300,000 11,132,349 2.0
METALS - NON-FERROUS
Kimberly-Clark de
Mexico, S.A. de
C.V. "A" MEX 395,900 7,867,244 1.4
PAPER/PACKAGING
Compania
Siderurgica
Nacional S.A.
(CSN): (c) BRZL -- -- 1.4
METALS - STEEL
Common -- 112,958,000 5,192,856 --
144A ADR (b)(d) -- 57,500 2,630,625 --
Grupo Industrial
Minera Mexico,
S.A. de C.V. "B" MEX 1,824,924 6,912,591 1.3
METALS - NON-FERROUS
Companhia Cimento
Portland Itau
(Preferred) (c) BRZL 14,730,000 6,457,464 1.2
CEMENT
La Cementos
Nacional 144A
GDR (b)(c)(d) ECDR 16,800 5,880,000 1.1
CEMENT
Grupo Fernandez
Editores, S.A.
de C.V. "BCP"
(c) MEX 3,345,000 5,789,423 1.1
PAPER/PACKAGING
Compania
Siderurgica de
Tubarao (CST)
S.A. "B" 144A
ADR (b)(d) BRZL 134,500 4,875,625 0.9
METALS - STEEL
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Internacional de
Ceramica, S.A.
de C.V. "B": (c) MEX -- -- 0.7
BUILDING MATERIALS & COMPONENT
ADR (b) -- 70,000 $2,205,000 --
Common -- 302,000 1,830,303 --
Cospia S.A.
(Preferred "B") BRZL 1,268,000 3,861,090 0.7
METALS - STEEL
IRSA S.A. Class B
(c) ARG 1,067,000 3,513,852 0.6
FOREST PRODUCTS
C.A. Venezolana
de Pulpa y Papel
S.A.C.A.-
Venepal: VENZ -- -- 0.6
FOREST PRODUCTS
144A GDR (b)(d) -- 680,890 2,510,782 --
Common -- 916,738 679,465 --
Paranapanema
S.A. (Preferred) (c) BRZL 190,900,000 3,123,613 0.6
METALS - NON-FERROUS
Empaques
Ponderosa, S.A.
de C.V. "B" MEX 770,000 3,105,128 0.6
PAPER/PACKAGING
Dixie Lakekla
S.A. (Preferred) (c) BRZL 3,900,000 2,841,871 0.5
PAPER/PACKAGING
Corporacion
Cementera
Argentina S.A.
(Corcemar) (c) ARG 315,792 2,623,435 0.5
CEMENT
Acindar Industria ARG 2,070,000 2,258,332 0.4
METALS - STEEL
Venezolana de
Cementos,
S.A.C.A. "A" VENZ 1,052,007 1,738,901 0.3
CEMENT
Venezolana de
Prerreducidos
Caroni C.A. -
Venprecar 144A
GDR (b)(d) VENZ 270,500 1,656,813 0.3
METALS - STEEL
Cementos Argos
S.A. COL 135,989 1,299,465 0.2
CEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cementos Paz del
Rio, S.A. 144A
ADR (b)(d) COL 35,000 $866,250 0.2
CEMENT
Caemi Mineracao E
Metal
(Preferred) (c) BRZL 4,630,000 735,095 0.1
METALS - STEEL
Corimon C.A.
Sponsored ADR
(b) VENZ 31,700 317,000 0.1
BUILDING MATERIALS & COMPONENT
Papelera
Inversora S.A. ARG 3,616 11,763 --
PAPER/PACKAGING
--------------
106,990,293
--------------
Services (13.8%)
- -----------------------------------------------
Telecomunicacoes
Brasileiras S.A.
- Telebras: BRZL -- -- 3.9
TELEPHONE NETWORKS
Preferred -- 443,600,000 21,391,611 --
Preferred New -- 10,112,761 438,899 --
Telefonos de
Mexico, S.A. de
C.V. "L" ADR (b) MEX 240,000 13,200,000 2.4
TELEPHONE NETWORKS
Grupo Televisa,
S.A. de C.V. GDR
(b) MEX 262,400 11,644,000 2.1
BROADCASTING & PUBLISHING
Compania de
Telefonos de
Chile ADR (b) CHLE 74,000 6,965,250 1.3
TELEPHONE NETWORKS
Grupo Situr, S.A.
de C.V. "B": MEX -- -- 1.1
LEISURE & TOURISM
144A ADR (b)(d) -- 167,169 5,015,070 --
Common -- 427,000 1,293,939 --
Grupo Casa Autrey
S.A. de C.V.
Sponsored ADR
(b) MEX 158,300 4,828,150 0.9
WHOLESALE & INTERNATIONAL TRADE
Nadro, S.A. de
C.V. "L" (c) MEX 556,500 3,891,608 0.7
WHOLESALE & INTERNATIONAL TRADE
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Compania Peruana
de Telefonos "B"
(c) PERU 2,568,952 $3,575,703 0.7
TELEPHONE NETWORKS
Tele 2000 (c) PERU 704,441 1,951,492 0.4
WIRELESS COMMUNICATIONS
Telecom Argentina
S.A. "B" ARG 250,000 1,521,369 0.3
TELEPHONE NETWORKS
--------------
75,717,091
--------------
Finance (13.3%)
- -----------------------------------------------
Banco Bradesco de
Investimento
S.A. (Preferred) BRZL 1,752,982,287 16,408,247 2.9
BANKS-REGIONAL
Grupo Financiero
Bancrecer, S.A.
de C.V. "B" MEX 846,000 10,883,129 2.0
BANKS-REGIONAL
Seguros La
Comercial
America, S.A. de
C.V. "B" MEX 13,686,000 8,374,301 1.5
INSURANCE - MULTI-LINE
Banco Nacional
S.A. (Preferred) BRZL 288,648,798 7,859,182 1.4
BANKS-REGIONAL
Grupo Financiero
Banamex Accival,
S.A. de C.V. "C" MEX 764,000 5,253,613 1.0
BANKS-REGIONAL
Uniao Bancos
Brasileiros -
Unibanco
(Preferred "A") BRZL 155,670,000 4,924,628 0.9
BANKS-REGIONAL
Grupo Financiero
Bancomer, S.A.
de C.V. "C" MEX 4,090,000 4,743,065 0.9
BANKS-REGIONAL
Banco de Credito PERU 1,762,080 4,190,893 0.8
BANKS-REGIONAL
Banco Wiese: (c) PERU -- -- 0.7
BANKS-REGIONAL
Common -- 592,769 3,124,053 --
ADR (b) -- 22,500 478,125 --
Banco do Brasil
S.A. (Preferred) BRZL 136,800,000 2,755,450 0.5
BANKS-REGIONAL
Banco de Bogota COL 421,512 2,517,391 0.5
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacifico Peruano
Suisse PERU 45,842 $1,306,291 0.2
INSURANCE - MULTI-LINE
--------------
72,818,368
--------------
Retailers-Other (12.7%)
- -----------------------------------------------
Casa Anglo S.A.
(Preferred) (c) BRZL 81,848,037 21,334,796 3.9
Lojas Americanas
S.A. (Preferred)
(c) BRZL 564,725,469 17,396,756 3.2
Cifra, S.A. de
C.V.: MEX -- -- 1.7
"C" -- 2,675,000 7,217,512 --
"B" -- 825,000 2,350,962 --
Mesbla S.A.
(Preferred) (c) BRZL 37,742,000 7,289,036 1.3
Grupo Elektra,
S.A. de C.V.
"CPO" (c) MEX 644,000 7,177,448 1.3
Gran Cadena de
Almacenes
Colombianos COL 1,715,678 3,278,888 0.6
Carulla & Cia.
S.A. Class B
144A ADR (b)(d) COL 132,500 1,987,500 0.4
Farmacias
Benavides, S.A.
de C.V. "B" MEX 485,000 1,808,857 0.3
--------------
69,841,755
--------------
Consumer Non-Durables (11.0%)
- -----------------------------------------------
Coteminas S.A.
(Preferred) BRZL 40,781,300 17,394,384 3.2
TEXTILES & APPAREL
Embotelladora
Andina S.A. ADR
(b) CHLE 435,100 12,019,638 2.2
BEVERAGES - NON ALCOHOLIC
Fomento Economico
Mexicano, S.A.
de C.V. - Femsa
"B" MEX 2,151,000 9,463,899 1.7
BEVERAGES - ALCOHOLIC
Grupo Industrial
Maseca, S.A. de
C.V. "B" MEX 5,222,000 8,520,746 1.6
FOOD
Cia. Souza Cruz
Industria E
Comercio S.A. BRZL 705,870 6,690,711 1.2
TOBACCO
Jugos Del Valle
S.A. Series B
(c) MEX 550,000 3,044,872 0.6
BEVERAGES - NON ALCOHOLIC
Bavaria (c) COL 478,317 1,656,855 0.3
BEVERAGES - ALCOHOLIC
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Chocolates COL 89,896 $955,655 0.2
FOOD
Embotella Del
Valle de Anahuac
S.A. - Emvasa
"B" (c) MEX 46,000 219,814 --
BEVERAGES - NON ALCOHOLIC
--------------
59,966,574
--------------
Conglomerate (10.9%)
- -----------------------------------------------
Grupo Industrial
Alfa, S.A. de
C.V. "A" MEX 1,463,000 20,035,256 3.7
Grupo Carso, S.A.
de C.V. "A1" (c) MEX 1,222,500 13,019,340 2.4
Desc Sociedad de
Fomento
Industrial, S.A.
de C.V.: MEX -- -- 1.9
"B" -- 1,193,500 8,833,013 --
"A" -- 226,000 1,580,420 --
Grupo Sidek, S.A.
de C.V.: MEX -- -- 1.9
"B" -- 1,365,000 5,846,591 --
"A" -- 1,000,000 4,283,217 --
"L" -- 58,801 253,571 --
Commercial Del
Plata ARG 1,179,840 3,979,642 0.7
Mirgor 144A GDR
(b)(d) ARG 200,000 1,825,000 0.3
--------------
59,656,050
--------------
Energy (5.3%)
- -----------------------------------------------
Companhia
Energetica de
Minas Gerais -
Cemig
(Preferred) BRZL 98,917,000 10,079,220 1.8
ELECTRICAL & GAS UTILITIES
C.A. La
Electricidad de
Caracas VENZ 3,265,055 6,376,460 1.2
ELECTRICAL & GAS UTILITIES
BR Distribuidora
S.A. BRZL 105,030,000 5,948,382 1.1
ENERGY SOURCES
Chilegener S.A.
ADR (b) CHLE 128,000 3,616,000 0.7
ELECTRICAL & GAS UTILITIES
Electricidad de
Argentina 144A
ADR (b)(d) ARG 110,857 2,023,140 0.4
ELECTRICAL & GAS UTILITIES
Companhia
Brasileira de
Petroleo
Ipiranga S.A.
(Preferred) BRZL 27,800,000 500,664 0.1
ENERGY SOURCES
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Centrais
Electricas
Brasileiras S.A.
- Electrobras
(Preferred B)
New BRZL 692,704 $265,099 --
ELECTRICAL & GAS UTILITIES
--------------
28,808,965
--------------
Capital Goods (4.7%)
- -----------------------------------------------
Iochpe Maxion
(Preferred) (c) BRZL 22,740,000 15,761,730 2.8
MACHINERY & ENGINEERING
Bardella S.A. -
Indust Mec
(Preferred) (c) BRZL 14,135 3,600,741 0.7
MACHINERY & ENGINEERING
Bufete
Industrial, S.A.
de C.V. ADR (b) MEX 80,100 3,244,050 0.6
CONSTRUCTION
Grupo Tribasa,
S.A. de C.V.
Sponsored ADR
(b)(c) MEX 52,600 1,650,325 0.3
CONSTRUCTION
Confab Industrial
S.A. (Preferred)
(c) BRZL 692,000 1,229,858 0.2
MACHINERY & ENGINEERING
John Deere S.A.
de C.V. Series A MEX 190,000 503,788 0.1
MACHINERY & ENGINEERING
--------------
25,990,492
--------------
Consumer Durables (1.7%)
- -----------------------------------------------
Brasmotor S.A.
(Preferred) (c) BRZL 16,390,000 6,796,801 1.2
APPLIANCES & HOUSEHOLD DURABLES
Continental 2001
S.A. (Preferred) BRZL 63,472,000 1,504,076 0.3
APPLIANCES & HOUSEHOLD DURABLES
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Consorcio Grupo
Dina, S.A. de
C.V. ADR (b) MEX 78,000 $1,004,250 0.2
AUTOMOBILES
--------------
9,305,127
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Equity Investments
(cost $436,538,340)........................... 509,094,715 92.9
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Fixed Income Principal
Investment Currency Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------
<CAPTION>
Government Bond (0.8%)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Venezuela
- -----------------------------------------------
Republic of
Venezuela, Debt
Conversion Bond,
5.75% due
12/18/07 (e) USD 9,500,000 4,595,625 0.8
<CAPTION>
Corporate Bond (0.0%)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peru
- -----------------------------------------------
Tele 2000 S.A.,
Conv. Bond,
9.75% due
4/14/97 144A (d) USD 251,000 243,470 --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Fixed Income Investments (cost
$5,244,482)................................... 4,839,095 0.8
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Short-Term
Investment
- -----------------
<S> <C> <C> <C> <C>
Repurchase Agreement (7.5%)
- -----------------------------------------------
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$43,895,000 Federal National Mortgage
Association Medium Term Note, 5.22% due
7/10/98. (Market value of $41,830,618,
including accrued interest.) (cost
$41,129,369)..................................
41,129,369 7.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Investments (cost $482,912,191)*......... 555,063,179 101.2
Liabilities Less Other Assets.................. (6,430,069) (1.2 )
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net Assets..................................... $548,633,110 100.0
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $548,633,110.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(e) The coupon rate shown on floating rate note represents the rate at period
end.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* For Federal income tax purposes, cost is $483,430,419 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 91,135,609
Unrealized depreciation: (19,502,849)
-------------
Net unrealized
appreciation: $ 71,632,760
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
WRITTEN COVERED CALL OPTION OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Expiration Number of
Strike Date Contracts
----------- ----------- -------------
<S> <C> <C> <C>
Telefonos de Mexico, S.A. de C.V. -- Telmex (cost $66,750)...................... 70 11/15/94 300
<CAPTION>
Market
Currency Value
----------- ---------
<S> <C> <C>
Telefonos de Mexico, S.A. de C.V. -- Telmex (cost $66,750)...................... USD $ 1,875
---------
---------
<FN>
- ----------------
See Notes 1 and 5 of the financial statements.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets (a)
-----------------------------------------------------------------
Fixed
Equity Income Short-Term Other Total
----------- ----------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Argentina................... 3.2 3.2
Brazil...................... 38.0 38.0
Chile....................... 4.2 4.2
Colombia.................... 2.4 2.4
Ecuador..................... 1.1 1.1
Mexico...................... 38.7 38.7
Peru........................ 2.8 2.8
Venezuela................... 2.5 0.8 3.3
United States............... 7.5 (1.2) 6.3
-- --
--- --- ---------
Total....................... 92.9 0.8 7.5 (1.2) 100.0
-- --
-- --
--- --- ---------
--- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $548,633,110.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $482,912,191) (Note 1)..................................... $ 555,063,179
U.S. currency............................................................................
$ 38
Foreign currency (cost $5,399,742).......................................................
5,515,730 5,515,768
----------
Receivable for securities sold....................................................................... 17,000,975
Receivable for Fund shares sold...................................................................... 5,398,807
Dividends and dividend withholding tax reclaims receivable........................................... 448,646
Interest receivable.................................................................................. 202,962
Unamortized deferred organizational expenses (Note 1)................................................ 52,135
-------------
Total assets......................................................................................... 583,682,472
-------------
Liabilities:
Payable for securities purchased..................................................................... 26,659,500
Payable for Fund shares repurchased.................................................................. 7,303,307
Payable for investment management and administration fees (Note 2)................................... 413,628
Payable for service and distribution expenses (Note 2)............................................... 316,128
Payable for printing and postage expenses............................................................ 103,796
Payable for registration fees........................................................................ 70,945
Payable for transfer agent fees (Note 2)............................................................. 68,266
Payable for professional fees........................................................................ 62,225
Payable for custodian fees........................................................................... 41,836
Payable for Directors' fees (Note 2)................................................................. 2,525
Payable for Written Options (Premiums Received $66,750).............................................. 1,875
Accrued expenses..................................................................................... 5,331
-------------
Total liabilities.................................................................................... 35,049,362
-------------
Net assets............................................................................................. $ 548,633,110
-------------
-------------
Class A:
Net asset value and redemption price per share
($336,959,883 DIVIDED BY 12,906,277 shares outstanding)............................................. $ 26.11
-------------
-------------
Maximum offering price per share
(100/95.25 of $26.11)*............................................................................... $ 27.41
-------------
-------------
Class B:+
Net asset value and offering price per share
($211,673,227 DIVIDED BY 8,160,109 shares outstanding).............................................. $ 25.94
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................................................. $ 442,264,774
Accumulated net realized gain on investments and foreign currency conversions........................ 33,997,752
Net unrealized appreciation of investments, written options, dividends and dividend withholding tax
reclaims receivable, interest receivable, securities purchased and sold and foreign currency 72,370,584
conversions.........................................................................................
-------------
Total -- representing net assets applicable to capital shares outstanding............................ $ 548,633,110
-------------
-------------
</TABLE>
- ----------------
* 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.
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 OPERATIONS
For the year ended October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income (net of foreign tax withheld of $576,575)............................................ $ 5,653,787
Interest income...................................................................................... 865,886
------------
Total investment income.............................................................................. 6,519,673
------------
Expenses:
Investment management and administration fees (Note 2)............................................... 3,601,031
Service and distribution expenses (Note 2):
Class A.............................................................................. $ 1,263,153
Class B.............................................................................. 1,204,826 2,467,979
------------
Transfer agent fees (Note 2)......................................................................... 1,170,802
Custodian fees....................................................................................... 511,485
Registration fees.................................................................................... 164,064
Printing and postage expenses........................................................................ 138,640
Professional fees.................................................................................... 112,831
Amortization of organizational expenses (Note 1)..................................................... 30,200
Director's fees (Note 2)............................................................................. 5,532
Other................................................................................................ 19,111
------------
Total expenses....................................................................................... 8,221,675
------------
Net investment loss.................................................................................... (1,702,002)
------------
Net realized and unrealized gain on investments and foreign currencies (Note 1):
Net realized gain on investments....................................................... 52,869,883
Net realized loss on foreign currency conversions...................................... (16,414,110)
------------
Net realized gain.................................................................................... 36,455,773
Change in unrealized appreciation of dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold, and foreign
currency conversions.................................................................. 624,742
Change in unrealized appreciation of investments....................................... 42,935,159
------------
Net unrealized appreciation.......................................................................... 43,559,901
------------
Net realized and unrealized gain on investments and foreign currencies................................. 80,015,674
------------
Net increase in net assets resulting from operations................................................... $ 78,313,672
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss).................................................................
$ (1,702,002) $ 1,329,751
Net realized gain on investments and foreign currency conversions............................
36,455,773 1,459,001
Change in unrealized appreciation (depreciation) of investments, dividends and dividend
withholding tax reclaims receivable, interest receivable, securities purchased and sold, and
foreign currency conversions................................................................
43,559,901 29,665,756
---------------- ----------------
Net increase in net assets resulting from operations.........................................
78,313,672 32,454,508
---------------- ----------------
Class A:+
Distributions to shareholders from: (Note 1)
Net investment income........................................................................
(1,602,016) (721,128)
Net realized gain on investments and foreign currency........................................
(1,208,111) (6,390,094)
Class B:++
Distributions to shareholders from: (Note 1)
Net investment income........................................................................
(278,582) 0
Net realized gain on investments and foreign currency........................................
(226,277) 0
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................................
1,159,589,487 66,581,343
Decrease from capital shares repurchased.....................................................
(828,810,299) (43,154,222)
---------------- ----------------
Net increase from capital share transactions.................................................
330,779,188 23,427,121
---------------- ----------------
Total increase in net assets...................................................................
405,777,874 48,770,407
Net assets:
Beginning of year............................................................................
142,855,236 94,084,829
---------------- ----------------
End of year..................................................................................
$ 548,633,110* $ 142,855,236**
----------------
---------------- ----------------
----------------
</TABLE>
- ----------------
* Including undistributed net investment income of $0.
** Including undistributed net investment income of $1,142,192.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
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
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------- CLASS B++
AUGUST 13, 1991 ----------------------------
(COMMENCEMENT APRIL 1, 1993
YEAR ENDED OCTOBER 31, OF OPERATIONS) YEAR ENDED TO
--------------------------- TO OCTOBER 31, OCTOBER 31,
1994(A) 1993(A) 1992 OCTOBER 31, 1991 1994(A) 1993(A)
-------- -------- ------- ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............ $ 19.78 $ 15.59 $ 16.45 $ 14.29 $ 19.75 $ 16.26
-------- -------- ------- ---------------- ----------- --------------
Income from investment operations:
Net investment income......................... (0.08) 0.18* 0.25* 0.01* (0.22) (0.07)
Net realized and unrealized gain (loss) on 6.75 5.21 (0.98) 2.15 6.74 3.56
investments..................................
-------- -------- ------- ---------------- ----------- --------------
Net increase (decrease) from investment 6.67 5.39 (0.73) 2.16 6.52 3.49
operations...................................
-------- -------- ------- ---------------- ----------- --------------
Distributions:
Net investment income......................... (0.19) (0.12) (0.13) (0.00) (0.18) (0.00)
Net realized gain on investments.............. (0.15) (1.08) (0.00) (0.00) (0.15) (0.00)
-------- -------- ------- ---------------- ----------- --------------
Total distributions......................... (0.34) (1.20) (0.13) (0.00) (0.33) (0.00)
-------- -------- ------- ---------------- ----------- --------------
Net asset value, end of period.................. $ 26.11 $ 19.78 $ 15.59 $ 16.45 $ 25.94 $ 19.75
-------- -------- ------- ---------------- ----------- --------------
-------- -------- ------- ---------------- ----------- --------------
Total investment return(d)...................... 34.10% 37.1% (4.5)% 15.1%(b) 33.33% 21.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)............ $336,960 $129,280 $94,085 $125,038 $211,673 $13,576
Ratio of net investment income (loss) to average
net assets..................................... (0.29)% 1.3%* 1.3%* 1.2%*(c) (0.79)% (0.7)%(c)
Ratio of expenses to average net assets......... 2.04% 2.4%* 2.4%* 2.4%*(c) 2.54% 2.9%(c)
Portfolio turnover rate+++...................... 155% 112% 159% none 155% 112%
</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 G.T. Capital Management, Inc. of Fund operating
expenses of $0.02, $0.04 and $0.01 for the years ended October 31, 1993 and
1992 and for the period from August 13, 1991 to October 31, 1991,
respectively. Without such reimbursements, the expense ratios would have
been 2.49%, 2.62% and 3.42% and the ratios of net investment income to
average net assets would have been 1.25%, 1.07% and 0.15% for the years
ended October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Latin America Growth Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
eleven series of shares in operation, each series corresponding to a distinct
portfolio of investments. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or, in the principal over-the-counter market in
which such securities are traded as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rate, except that when an occurrence subsequent to the time
a value was so established is likely to have materially changed such value, then
the fair value of those securities will be determined by consideration of other
factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, other assets and liabilities are recorded
in the books and records of the Fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined using
historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when accrued or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities forward foreign currency contracts, sales of
forward currency conversions, currency gains or losses realized between the
trade and settlement dates on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities at fiscal year end, resulting from changes in the exchange rate.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be paid to the Fund under each
agreement at its maturity.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in market value is recorded by
the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases or sales of securities or to hedge
the value of portfolio securities denominated in a foreign currency.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last
settlement price, or in the case of an over-the-counter option is valued at the
bid price obtained from a broker. If an option expires on its stipulated
expiration date or if the Fund enters into a closing purchase transaction, a
gain or loss is realized without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is extinguished.
If a written call option is exercised, a gain or loss is realized from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received. If a written put option is exercised, the cost of
the underlying security purchased would be decreased by the premium originally
received. The Fund can write options only on a covered basis, which for a call
requires that the fund hold the underlying security, and for a put requires the
Fund to maintain in a segregated account cash, U.S. government securities or
other liquid, high-grade debt securities in an amount not less than the exercise
price at all times while the put option is outstanding. At October 31, 1994, the
Fund had written options outstanding.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid. At October
31, 1994, the Fund held no purchased option contracts.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on an identified
cost basis. Interest income is recorded on the accrual basis. Where a high level
of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund 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.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(H) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $177,793. These
expenses are being amortized on a straight line basis over a five-year period.
(K) ADOPTION OF AICPA STATEMENT OF POSITION 93-2
As of November 1, 1993, the Fund adopted Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
Accordingly, permanent book and tax basis differences relating to shareholder
distributions have been reclassified to paid-in capital. As of November 1, 1993,
the cumulative effect of such differences totaling $78,578 and $119,016 was
reclassified from undistributed net investment income and accumulated net
realized gain on investments and foreign currency conversions, respectively, to
paid-in capital. Net investment loss, net realized gain on investments and
foreign currency conversions and net assets were not affected by this change.
The Statement of Changes in Net Assets and the Financial Highlights, for the
prior periods, have not been restated to reflect the changes in this
presentation.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent with
investments of domestic origin. The Fund's investment in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% of the first $500 million of average daily net assets of the
Fund; 0.95% of the next $500 million; 0.925% of the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, is the Fund's distributor. The Fund offers Class A shares and Class B
shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1994, G.T. Global retained
$443,629 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1994, G.T. Global collected CDSCs in the amount of
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
$362,115. In addition, G.T. Global makes ongoing shareholder servicing and trail
commission payments to dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% and 2.90%, of the average net
assets of the Fund's Class A and Class B shares, respectively. If necessary,
this limitation will be effected by waivers by G.T. Capital of investment
management and administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1994, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $825,391,305 and $533,274,904. There were no purchases
or sales of U.S. government obligations for the year ended October 31, 1994.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
4. CAPITAL SHARES
At October 31, 1994, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund (inactive); and 2,800,000,000 shares remain
unclassified. The shares of each of the foregoing series of the Company were
divided equally into two classes, designated Class A and Class B common stock.
Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
--------------------------- ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 33,720,715 $ 806,747,697 2,506,794 $ 46,069,459
Shares issued in connection with reinvestment of
distributions................................................. 111,943 2,416,821 368,884 5,503,764
------------ ------------- ---------- ------------
33,832,658 809,164,518 2,875,678 51,573,223
Shares repurchased.............................................. (27,463,633) (659,239,270) (2,372,133) (40,939,595)
------------ ------------- ---------- ------------
Net increase.................................................... 6,369,025 $ 149,925,248 503,545 $ 10,633,628
------------ ------------- ---------- ------------
------------ ------------- ---------- ------------
<CAPTION>
APRIL 1, 1993
YEAR ENDED TO
OCTOBER 31, 1994 OCTOBER 31, 1993
--------------------------- ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 14,675,635 $ 350,025,309 801,047 $ 15,008,120
Shares issued in connection with reinvestment of
distributions................................................. 18,533 399,660 0 0
------------ ------------- ---------- ------------
14,694,168 350,424,969 801,047 15,008,120
Shares repurchased.............................................. (7,221,595) (169,571,029) (113,511) (2,214,627)
------------ ------------- ---------- ------------
Net increase.................................................... 7,472,573 $ 180,853,940 687,536 $ 12,793,493
------------ ------------- ---------- ------------
------------ ------------- ---------- ------------
</TABLE>
5. WRITTEN OPTIONS:
The Fund's written options contract activity for the year ended October 31,
1994, was as follows:
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
--------- ---------
<S> <C> <C>
Options outstanding at October 31, 1993................................................... 0 $ 0
Options written during the year ended October 31, 1994.................................... 300 66,750
Options cancelled in closing purchase transactions........................................ 0 0
Options expired prior to exercise......................................................... 0 0
Options exercised......................................................................... 0 0
--- ---------
Options outstanding at October 31, 1994................................................... 300 $ 66,750
--- ---------
--- ---------
</TABLE>
- --------------
FEDERAL TAX INFORMATION:
For Federal income tax purposes, the Fund had distributions from long-term
capital gains of $1,023,959.
Statement of Additional Information Page 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
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
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
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 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 IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
LATSA601MC
<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
March 1, 1995
As Revised January 5, 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 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 March 1, 1995 as revised January 5,
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................................................................................. 5
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 16
Execution of Portfolio Transactions...................................................................................... 18
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.............................................................................................. 38
Financial Statements..................................................................................................... 40
</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 Fund has obtained an exemption from the SEC to permit
the Fund to invest in a manner that is consistent with the SEC's proposed rule.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
of closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide that, in general, the Fund may purchase shares of
a closed-end investment company unless (a) such a purchase would cause the Fund
to own in the aggregate more than 3 percent of the total outstanding voting
stock of the investment company or (b) such a purchase would cause the Fund to
have more than 5 percent of its total assets invested in the investment company
or more than 10 percent of its total assets invested in the aggregate in all
such investment companies. Investment in such investment companies may also
involve the payment of substantial premiums above the value of such companies'
portfolio securities. The Fund does not intend to invest in such funds unless,
in the judgment of 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
("O.E.C.D.") or have AAA ratings.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs typically are issued by an American bank or trust company which evidences
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by the Fund in units or attached to
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by vote
of the Company's Board of Directors without shareholder approval.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, I.E.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from purchasing securities during times
when outstanding borrowings represent more than 5% of its assets. Nevertheless,
this policy may be changed in the future by vote of a majority of the Company's
Board of Directors. In the event that the Fund employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Fund's earnings or net asset value will increase faster than otherwise would
be the case; conversely, if such income and gains fail to exceed such costs, the
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase, the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association ("GNMA") certificates or other securities together with a
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date. The Fund will maintain in a segregated
account with a custodian cash, U.S. government securities or other liquid, high
grade debt securities in an amount sufficient to cover its obligations under
"roll" transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund has a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are being lent, but it will call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Loans only will be made to
firms deemed by 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) to offset potential declines in long
positions in securities it owns, or anticipates acquiring, and (ii) in order to
maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund also will be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
- --------------------------------------------------------------------------------
OPTIONS, FUTURES AND
CURRENCY STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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.
Statement of Additional Information Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because 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, the Fund's investment manager, are not expected
to make any major price moves in the near future but that, over the long term,
are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
Statement of Additional Information Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, 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 (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.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when 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.
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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 offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided by
the dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.
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The Securities and Exchange Commission ("SEC") staff considers purchased OTC
options to be illiquid securities. The Fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund as the call writer will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
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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
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.
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GT GLOBAL EMERGING MARKETS FUND
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference
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GT GLOBAL EMERGING MARKETS FUND
between the exercise price of the option and the closing level of the
securities, currencies or index upon which the Futures Contract is based on the
expiration date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
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GT GLOBAL EMERGING MARKETS FUND
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which 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.
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
Statement of Additional Information Page 13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
the guidelines so require, set aside cash, U.S. government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or segregated accounts, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
- --------------------------------------------------------------------------------
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
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in
Statement of Additional Information Page 14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the
Securities Act of 1933 ("1933 Act"), are liquid or illiquid. The Board has
delegated the function of making day-to-day determinations of liquidity to 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 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
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
any particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of the Fund's holdings of securities and cash denominated in such
currency and, therefore, will cause an overall decline in the Fund's net asset
value and any net investment income and capital gains derived from such
securities to be distributed in U.S. dollars to shareholders of the Fund.
Moreover, if the value of the foreign currencies in which the Fund receives its
income falls relative to the U.S. dollar between receipt of the income and the
making of Fund distributions, the Fund may be required to liquidate securities
in order to make distributions if the Fund has insufficient cash in U.S. dollars
to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries, and the
U.S., and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. 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;
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings.
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities ; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
For purposes of concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Directors of the Fund, its
investment adviser, or distributor, each own beneficially more than 1/2 of
1% of the securities of such issuer and together own beneficially more than
5% of the securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation; or
(7) Invest more than 10% of its total assets in securities that are
restricted as to resale without registration under the 1933 Act.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
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 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.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest are generally traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of 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 period May 18, 1992 (commencement of operations)
through October 31, 1992, and for the fiscal years ended October 31, 1993 and
1994, the Fund paid aggregate brokerage commissions of $942,553, 2,361,620 and
$1,747,307, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when 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. The Fund anticipates that its annual
portfolio turnover rate should not exceed 100%; however, the portfolio turnover
rate will not be a limiting factor when management deems portfolio changes
appropriate. A 100% portfolio turnover rate would occur if the lesser of the
value of purchases or sales of portfolio securities for the Fund for a year
(excluding purchases of U.S. Treasury and other securities with a maturity at
the date of purchase of one year or less) were equal to 100% of the average
monthly value of the securities, excluding short-term investments, held by the
Fund during such year. Higher portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs that the Fund will
bear directly. For the fiscal year ended October 31, 1994 and 1993, the Fund's
portfolio turnover rates were 100% and 99%, respectively.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Bylaws authorize a Board of Directors of between 1 and 25 persons,
as fixed by the Board of Directors. Directors normally are elected by
shareholders; however, a majority of remaining Directors may fill Director
vacancies caused by resignation, death or expansion of the Board. The Company's
Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 42 Director of Liechtenstein Global Trust (holding company of the various international LGT
Director, Chairman of the Board and companies) since 1990; Director and President of LGT Asset Management since 1989; Director
President and President of GT Global since 1987; and Director and President of GT Services since
50 California Street 1990. Mr. Minella also is a director or trustee of each of the other investment companies
San Francisco, CA 94111 registered under the 1940 Act that is managed or administered by LGT Asset Management.
C. Derek Anderson, 53 Chairman, Anderson Capital Management, Inc. from 1988 to present; Chairman, Plantagenet
Director Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; Director, American
220 Sansome Street Heritage Group Inc.; Director, T.L. Higgins Inc. and various other companies. Anderson
Suite 400 also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94104 the 1940 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner of Baker & McKenzie (a law firm) and serves as Director and Chairman of C.D.
Director Stimson and Company (a private investment company); Trustee, Seattle Art Museum. Mr.
2 Embarcadero Center Bayley also is a director or trustee of each of the other investment companies registered
Suite 2400 under the 1940 Act that is managed or administered by LGT Asset Management.
San Francisco, CA 94111
Arthur C. Patterson, 52 Managing Partner of Accel Partners (a venture capital firm). Mr. Patterson also serves as
Director a director of various computing and software companies. Mr. Patterson also is a director
One Embarcadero Center or trustee of each of the other investment companies registered under the 1940 Act that is
Suite 3820 managed or administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 59 Private investor. From 1984 to 1986, Miss Quigley was President of Quigley Friedlander &
Director Co., Inc. (a financial advisory services firm). Ms. Quigley also is a director or trustee
1055 California Street of each of the other investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94108 administered by LGT Asset Management.
F. Christian Wignall, 39 Senior Vice President, Chief Investment Officer - Global Equities and a Director of LGT
Vice President and Chief Investment Asset Management since 1987, and Chairman of the Global Investment Policy Committee of
Officer - affiliated international LGT companies since 1990.
Global Equities
50 California Street
San Francisco, CA 94111
</TABLE>
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>
Gary Kreps, 40 Senior Vice President and Chief Investment Officer - Global Fixed Income of LGT Asset
Vice President and Chief Investment Management and a Director since 1992. Prior to joining LGT Asset Management, Mr. Kreps was
Officer - Senior Vice President of the Putnam Companies from 1988 to 1992.
Global Fixed Income
50 California Street
San Francisco, CA 94111
Helge K. Lee, 48 Senior Vice President, General Counsel and Secretary of LGT Asset Management, GT Global
Vice President and Secretary and GT Services since May, 1994. Mr. Lee was the Senior Vice President, General Counsel
50 California Street and Secretary of Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
San Francisco, CA 94111 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 Senior Vice President - Finance and Administration of LGT Asset Management, GT Global and
Vice President and GT Services since 1994. Prior thereto, Mr. Tufts was Vice President - Finance of LGT Asset
Chief Financial Officer Management and GT Global since 1987; Vice President - Finance of GT Services since 1990;
50 California Street and a Director of LGT Asset Management, GT Global and GT Services since 1991.
San Francisco, CA 94111
Kenneth W. Chancey, 50 Vice President of LGT Asset Management and GT Global since 1992. Mr. Chancey was Vice
Vice President and Chief President of Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Assistant General Counsel of LGT Asset Management, GT Global and GT Services since 1991.
Assistant Secretary From 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus Corporation. Prior thereto,
50 California Street he was associated with Colonial Management Associates, Inc.
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.
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., GT Global Developing Markets
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee and
officer of GT 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 9 registered investment companies
with 38 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 fiscal
year ended December 31, 1994, the Company paid Mr. Anderson, Mr. Bayley, Mr.
Patterson and Ms. Quigley received Directors' fees and expense reimbursements of
$37,114, $39,425, $31,941 and $33,178, respectively. For the year ended October
31, 1994, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley, who are not
directors, officers or employees of LGT Asset Management or any affiliated
company, received total compensation of $86,260.80, $91,278.72, $74,492.00 and
$78,665.19, respectively, from the 38 GT Global 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 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, has an initial two-year term with respect to the Fund
from the date of the commencement of Fund operations, and may be renewed for
additional one-year terms thereafter with respect to the Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract was approved with respect to the Fund by the vote of the
Board of Directors of the Company on June 15, 1994. The Management Contract
provides that with respect to the Fund either the Company or 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 period May 18, 1992 (commencement of operations)
through October 31, 1992, and for the fiscal years ended October 31, 1993 and
1994, the Fund paid investment management and administration fees to LGT Asset
Management in the amounts of $314,356, $1,161,673 and $4,702,869, respectively.
Certain emerging market countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's 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. The
Distribution Contracts were last approved with respect to the Fund's Class A and
Class B shares by the Board of Directors on June 15, 1994.
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.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 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 fiscal year:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1994................................................................. $ 1,530,305 $ 1,762,845
</TABLE>
The Plans were last approved with respect to the Fund on June 15, 1994 by the
Company's Board of Directors, including a majority of Directors who are not
"interested persons" of the Company (as defined in the 1940 Act) and who have no
direct or indirect financial interests in the operation of the Plans or in any
agreement related thereto ("Qualified Directors"). In approving the Plans, the
Directors determined that the 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 periods indicated 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>
1994............................................................................... $ 4,220,962 $ 460,124 $3,768,838
1993............................................................................... 1,561,000 161,475 1,399,525
May 18, 1992 (commencement of operations) through October 31, 1992................. 3,178,883 452,159 2,746,713
</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 year
ended October 31, 1994, GT Global collected contingent deferred sales charges in
the amount of $2,598 and $433,744, respectively.
TRANSFER AGENCY 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.
EXPENSES OF THE FUND
As described in the Prospectus, the Fund pays all of its own expenses not
assumed by other parties. The allocation of general Company expenses and
expenses shared among the Fund and other funds organized as series of the
Company are allocated on a basis deemed fair and equitable, which may be based
on the relative net assets of the Fund or the nature of the services performed
and relative applicability to the Fund. Expenditures, including costs incurred
in connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of the Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Fund generally
are higher than the comparable expenses of such other funds. For the fiscal
period May 18, 1992 (commencement of operations) through October 31, 1992, LGT
Asset Management reimbursed the Fund
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS 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 a the Class A and Class B aggregate operating expenses
in the amounts of $565,445 and $43,668, respectively.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the end of regular trading on The New York
Stock Exchange, Inc. ("NYSE") (currently at 4:00 p.m. Eastern time, unless
weather, equipment failure or other factors contribute to an earlier closing
time), on each Business Day as open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Funds' portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges, are valued at the last sale price on the exchange, or in the
principal over-the-counter market on which such securities are traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined by
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 at the average of the
last bid prices obtained from dealers in the case of OTC options. The value of
each security denominated in a currency other than U.S. dollars will be
translated into U.S. dollars at the prevailing exchange rate as determined by
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
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 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
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which will prohibit the Fund from disposing of
its portfolio securities or in fairly determining the value of its assets, or
(3) as the SEC may otherwise permit.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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.
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
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
December 31 of that year if the distributions are paid by the Fund during the
following January. Accordingly, those distributions will be taxed to
shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that represents income from foreign sources as his
own income from those sources, and (3) either deduct the taxes deemed paid by
him in computing his taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his federal income
tax. The Fund will report to its shareholders shortly after each taxable year
their respective shares of the Fund's income from sources within, and taxes paid
to, foreign countries if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, the
stock or of any gain from disposition of, stock of a PFIC (collectively "PFIC
income"), plus interest thereon, even if the Fund distributed the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
The "Tax Simplificiation and Technical Corrections Bill of 1993," passed in May
1994 by the House of Representatives, would substantially modify the taxation of
U.S. shareholders of foreign corporations, including eliminating the provisions
described above dealing with PFICs and replacing them (and other provisions)
with a regulatory scheme involving entities called "passive foreign
corporations." Three similar bills were passed by Congress in 1991 and 1992 and
vetoed. It is unclear at this time whether, and in what form, the proposed
modifications may be enacted into law.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS 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. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, Futures and Forward Contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However, income from
the disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all of those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign currency-denominated debt securities and options, Futures and Forward
Contracts and options on foreign currencies. Each section 988 gain or loss
generally is computed separately and treated as ordinary income or loss. In the
case of overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Fund attempts to monitor
section 988 transactions to minimize any adverse tax impact.
The foregoing is a general and abbreviated summary of certain U.S. federal
income tax considerations affecting the Fund and its shareholders. Investors are
urged to consult their own tax advisers for more detailed information and for
information regarding any foreign, state and local taxes applicable to
distributions received from the Fund.
Statement of Additional Information Page 29
<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, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London; 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. in Singapore; LGT Asset
Management Ltd., formerly G.T. Management (Australia) Ltd. in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
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 30
<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, 1994, was as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994......................................................................... 26.29%
May 18, 1992 through October 31, 1994............................................................... 21.26%
</TABLE>
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns for the periods shown,
were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994......................................................................... 26.77%
April 1, 1993 to October 31, 1994................................................................... 35.32%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Fund may quote non-standardized total returns that do not reflect the effect of
sales charges. Non-Standardized Returns may be quoted from the same or different
time periods for which Standardized Returns are quoted. The Fund's
Non-Standardized Returns for its Class A shares, stated as aggregate total
returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- -------------------------------------------------------------------------------------------------- -----------------------
<S> <C>
Year ended October 31, 1994....................................................................... 32.58%
May 18, 1992 through October 31, 1994............................................................. 68.52%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were as follows:
<TABLE>
<CAPTION>
PERIOD NON-STANDARDIZED RETURN
- ------------------------------------------------------------------------------------------------ -------------------------
<S> <C>
Year ended October 31, 1994..................................................................... 31.77%
April 1, 1993 to October 31, 1994............................................................... 65.43%
</TABLE>
The Fund's Non-Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994.......................................................................... 32.58%
May 18, 1992 through October 31, 1994................................................................ 23.69%
</TABLE>
Statement of Additional Information Page 31
<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>
Year ended October 31, 1994.......................................................................... 31.77%
April 1, 1993 through October 31, 1993............................................................... 37.42%
</TABLE>
Standardized Returns and non-Standardized Returns are not presented for the
Advisor Class shares because no shares of that class were outstanding during the
fiscal year ended October 31, 1994.
The Fund's investment results will vary from time to time depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund, so that current or past yield or total return should not be considered
representative of what an investment in the Fund may earn in any future period.
These factors and possible differences in the methods used in calculating
investment results should be considered when comparing the Fund's investment
results with those published for other investment companies and other investment
vehicles. The Fund's results also should be considered relative to the risks
associated with the Fund's investment objective and policies. The Fund will
include performance data for both classes of shares of the Fund in any
advertisement or information including performance data of the Fund.
From time to time, the Fund and 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 the Fund's assets under management
in advertising materials.
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 invesments 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 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 Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service or
BBB by Standard and Poor's Corporation, or, in the case of nonrated bonds,
BBB by Fitch Investors Service (excluding Collateralized Mortgage
Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (E.G.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(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.
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock markets in developing countries.
(14) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(15) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(16) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(17) Datastream and Worldscope an on-line database retrieval service for
information including but not limited to international financial and
economic data.
(18) International Financial Statistics, which is produced by the
International Monetary Fund.
(19) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(20) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(21) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's Ratings Group.
(22) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
such financial organizations as Salomon Brothers, Inc., Lehman Brothers, Merrill
Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith Barney
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Shearson, S.G. Warburg, Jardine Flemming, Barings Securities, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, performance
rankings, ratings and commentary reported periodically in national financial
publications, included but not limited to Money Magazine, Smart Money, Global
Finance, EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin
Finance, the Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To
Personal Finance, Barron's, The Financial Times, USA Today, The New York Times,
Far Eastern Economic Review, The Economist and Investors Business Digest. Each
Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above and other indices which may be
developed and made available.
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 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 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
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 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 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 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.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
From time to time, the Funds 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 World
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, GT Guide
to World Equity Markets, Salomon Brothers, Inc., S.G. Warburg and Barings
Securities.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country or market: International Finance Corporation,
GT Guide to World Equity Markets, Salomon Brothers Inc., S.G. Warburg and
Barings Securities.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, financial
services, health care services and supplies, consumer products and services
and telecommunications equipment and services (sources of such information
may include, but would not be limited to, The World Bank, OECD, IMF,
Bloomberg and Datastream).
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: GT
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 GT Global provided assistance to the government of Hong Kong in linking
its currency to the U.S. dollar, and that in 1987 Japan's Ministry of Finance
licensed LGT Investment Trust Management Ltd. (Japan) as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of GT Global by
the government of Hong Kong, Japan's Ministry of Finance or any other government
or government agency. Nor do any such accomplishments of GT Global provide any
assurance that the GT Global Mutual Funds' investment objectives will be
achieved.
THE GT 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
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, LGT 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;
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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.
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 RATINGS GROUP ("S & P") ratings of commercial paper are graded
into four categories ranging from "A" for the highest quality obligations to "D"
for the lowest. A -- Issues assigned its highest rating are regarded as having
the greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 -- This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (++) sign
designation. A-2 -- Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." A-3 -- issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
Statement of Additional Information Page 38
<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 risks appear somewhat
greater.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.
Speculative grade ratings are as follows:
Ba -- These Bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
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
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the GT Global Emerging Markets Fund at
October 31, 1994 and for the period 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 and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the schedule of portfolio investments, as of
October 31, 1994, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the two years in the
period then ended and for the period from May 18, 1992 (commencement of
operations) to October 31, 1992. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Emerging Markets Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the two years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Materials/Basic Industries (15.8%)
- -----------------------------------------------
Chemicals (2.5%)
- -----------------------------------------------
TPI Polene Company
Ltd. (Foreign) THAI 994,600 $10,776,164 1.6
Miwon Petro-
chemical Co.: KOR -- -- 0.6
Common -- 140,680 2,977,355 --
New (c) -- 51,342 1,086,603 --
Fauji Fertilizer
Co. Ltd. PAK 475,000 1,537,770 0.2
Korea Chemical
Company Ltd. KOR 3,500 593,717 0.1
Lucky Company Ltd.: KOR -- -- --
Common -- 4,494 170,809 --
New -- 264 9,733 --
Engro Chemical (c) PAK 16,260 140,906 --
Forest Products (1.5%)
- -----------------------------------------------
Sappi Limited S AFR 500,000 8,416,459 1.2
PT Barito Pacific
Timber (Foreign) INDO 820,000 1,396,869 0.2
Aracruz Celulose
S.A. ADR (b)(c) BRZL 50,000 637,500 0.1
Gold (1.0%)
- -----------------------------------------------
Ashanti Goldfields
144A GDR (b)(c)(d) S AFR 185,000 3,959,000 0.6
Kloof Gold Mining S AFR 150,000 2,562,344 0.4
Metals - Non-Ferrous (2.0%)
- -----------------------------------------------
Companhia Vale do
Rio Doce - CVRD
(Preferred) BRZL 43,600,000 9,453,555 1.3
General Mining
Union Corpo-
ration (Gencor) S AFR 765,000 2,813,903 0.4
Paranapanema S.A.
(Preferred) (c) BRZL 146,600,000 2,398,751 0.3
Metals - Steel (4.4%)
- -----------------------------------------------
SA Iron & Steel
Industrial Corp.
Ltd. - ISCOR S AFR 12,540,097 14,635,324 2.1
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Compania
Siderurgica de
Tubar S.A. "B"
144A ADR (b)(d)(c) BRZL 217,000 $7,866,250 1.1
Pohang Iron & Steel
Company Ltd. KOR 36,220 4,306,201 0.6
Korea Iron & Steel
Company: (c) KOR -- -- 0.4
Common -- 60,190 1,781,891 --
New -- 21,380 613,955 --
Pusan Steel Pipe
Corporation KOR 32,888 1,441,802 0.2
Paper/Packaging (1.1%)
- -----------------------------------------------
Siam Pulp & Pulp
(Foreign) THAI 873,000 3,082,825 0.4
Kimberly-Clark de
Mexico, S.A. de
C.V. "A" MEX 132,000 2,623,076 0.4
PT Indah Kiat Pulp
& Paper (Foreign) INDO 1,860,000 2,205,111 0.3
Packages Ltd. PAK 21,500 126,553 --
Cement (3.3%)
- -----------------------------------------------
Cementos Mexicanos,
S.A. de C.V. -
Cemex: MEX -- -- 1.1
"B" -- 796,125 7,399,880 --
"A" -- 40,837 365,891 --
Siam Cement Co.
Ltd. (Foreign) THAI 78,600 4,535,586 0.6
Chosun Refractories
Co.: KOR -- -- 0.4
Common -- 52,420 2,212,232 --
New (c) -- 13,623 563,764 --
Dandot Cement Co.
Ltd. (c) PAK 563,080 2,669,935 0.4
PT Indocement
Tunggal (Foreign) INDO 580,000 2,189,687 0.3
PT Semen Cibinong
(Foreign) INDO 524,600 1,859,770 0.3
Cherat Cement (c) PAK 210,908 827,631 0.1
Cementos Norte
Pacasmayo S.A. (c) PERU 139,151 564,126 0.1
--------------
110,802,928
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banking (14.0%)
- -----------------------------------------------
Banks - Money Center (1.6%)
- -----------------------------------------------
Development &
Commercial Bank
Bhd. MAL 1,738,000 $4,796,594 0.7
United Overseas
Bank Ltd.
(Foreign) SING 230,000 2,522,480 0.4
Akbank T.A.S. TRKY 8,000,000 2,286,033 0.3
Malayan Banking
Berhad MAL 250,000 1,702,877 0.2
Banks - Regional (12.4%)
- -----------------------------------------------
The Thai Farmers
Bank, Ltd.
(Foreign) THAI 1,327,600 11,720,385 1.7
Grupo Financiero
Banamex Accival,
S.A. de C.V -
Banacci.: MEX -- -- 1.3
"B" -- 1,152,000 7,048,951 --
"C" -- 324,000 2,227,972 --
"L" -- 42,100 279,685 --
Siam Commercial
Bank Public Co.
Ltd. (Foreign) THAI 700,700 7,254,438 1.0
Banco do Brasil
S.A. (Preferred) BRZL 356,630,000 7,183,306 1.0
Cho Hung Bank KOR 302,489 5,574,974 0.8
Uniao Bancos
Brasileiros -
Unibanco
(Preferred "A") BRZL 165,720,000 5,242,564 0.7
Banco Nacional S.A.
(Preferred) BRZL 185,011,200 5,037,390 0.7
Banco Ganadero
S.A.: COL -- -- 0.7
144A ADR (b)(d) -- 150,000 4,200,000 --
Common -- 2,394,122 785,839 --
Grupo Financiero
Bancomer, S.A. de
C.V. "C" MEX 4,202,000 4,872,949 0.7
Banco de Credito PERU 2,022,838 4,811,074 0.7
Bank of Seoul: KOR -- -- 0.6
Common -- 369,000 3,737,415 --
New (c) -- 77,722 787,207 --
Grupo Financiero
Serfin S.A. de
C.V.: MEX -- -- 0.5
ADR (b) -- 125,000 2,218,750 --
"B" -- 280,000 1,207,459 --
Philippines
National Bank PHIL 210,000 3,302,419 0.5
Chung Chong Bank KOR 135,000 1,751,701 0.2
State Bank of India
Limited (c) IND 214,700 1,276,345 0.2
Korea First Bank KOR 60,000 1,214,966 0.2
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Shinhan Bank KOR 30,000 $1,106,652 0.2
Turkiye Garanti
Bankasi A.S. TRKY 4,197,000 994,550 0.1
Banco Itau S.A.
(Preferred) BRZL 2,970,000 953,637 0.1
PT Bank Bali
(Foreign) INDO 248,500 675,023 0.1
Ionian Bank GREC 34,544 670,736 0.1
Banco Bradesco de
Investimento S.A.
(Preferred) BRZL 58,592,750 548,439 0.1
Korea Long Term
Credit Bank: KOR -- -- 0.1
Common -- 15,000 529,101 --
New (c) -- 2,818 96,418 --
Boram Bank: KOR -- -- 0.1
Preferred -- 43,000 418,191 --
Preferred
New (c) -- 10,220 96,411 --
--------------
99,132,931
--------------
Services (12.3%)
- -----------------------------------------------
Grupo Televisa,
S.A. de C.V. GDR
(b) MEX 436,500 19,369,679 2.7
BROADCASTING & PUBLISHING
Telecomunicacoes
Brasileiras S.A. -
Telebras: BRZL -- -- 2.5
TELEPHONE NETWORKS
Sponsored ADR (b) -- 214,189 10,281,072 --
Preferred -- 146,528,300 7,065,997 --
Preferred New (c) -- 3,340,409 144,975 --
Telefonos de
Mexico, S.A. de
C.V.: MEX -- -- 2.0
TELEPHONE NETWORKS
"L" ADR (b) -- 232,200 12,771,000 --
"L" -- 400,000 1,116,550 --
Pakistan
Telecommunica-
tions Company Ltd.
Vouchers 144A
(b)(d)(c) PAK 72,953 12,073,722 1.7
TELEPHONE NETWORKS
Philippine Long
Distance Tele-
phone Company ADR
(b) PHIL 96,100 5,477,700 0.8
TELEPHONE-LONG DISTANCE
Lucky - Goldstar
International
Corporation KOR 155,000 2,889,897 0.4
WHOLESALE & INTERNATIONAL TRADE
Mesbla S.A.
(Preferred) BRZL 14,885,000 2,874,710 0.4
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Compania Peruana de
Telefonos "B" PERU 1,882,162 $2,619,766 0.4
TELEPHONE NETWORKS
Grupo Situr, S.A.
de C.V. "B" MEX 840,000 2,545,455 0.4
LEISURE & TOURISM
Keppel Corporation
Ltd. SING 235,000 2,161,104 0.3
TRANSPORTATION-SHIPPING
Daewoo Corporation KOR 89,000 1,887,746 0.3
WHOLESALE & INTERNATIONAL TRADE
PT Indonesia
Satellite (Indo-
sat) ADR (b) INDO 26,500 1,040,125 0.1
TELEPHONE NETWORKS
Compania de
Telefonos de Chile
ADR (b) CHLE 10,300 969,488 0.1
TELEPHONE NETWORKS
Gran Cadena de
Almacenes
Colombianos COL 460,000 879,121 0.1
RETAILERS-OTHER
Dusit Thani
Corporation, Ltd.
(Foreign) THAI 389,620 469,045 0.1
LEISURE & TOURISM
Indian Hotels IND 3,000 54,580 --
LEISURE & TOURISM
--------------
86,691,732
--------------
Consumer Non-Durables (7.3%)
- -----------------------------------------------
Panamerican
Beverages, Inc.
"A" (b) MEX 419,400 14,416,875 2.0
BEVERAGES-NON ALCOHOLIC
Coteminas S.A.
(Preferred) BRZL 27,440,000 11,703,940 1.7
TEXTILES & APPAREL
South African
Breweries Ltd. S AFR 325,000 7,618,454 1.1
BEVERAGES-ALCOHOLIC
San Miguel
Corporation "B" PHIL 800,000 4,354,839 0.6
BEVERAGES-ALCOHOLIC
Cia. Souza Cruz
Industria E
Comercio S.A. BRZL 379,426 3,596,455 0.5
TOBACCO
Dhan Fibres Ltd.
(c) PAK 6,114,000 2,899,052 0.4
TEXTILES & APPAREL
PT Indo-Rama
Synthetics
(Foreign) INDO 446,000 1,786,464 0.3
TEXTILES & APPAREL
Hellenic Bottling
Co., S.A. GREC 53,370 1,657,582 0.2
BEVERAGES-NON ALCOHOLIC
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Mahavir Spinning
(Rights) IND 67,858 $1,407,842 0.2
TEXTILES & APPAREL
Dewan Salman Fibre
Ltd. (c) PAK 200,000 1,111,838 0.2
TEXTILES & APPAREL
Nishat Mills Ltd.
(c) PAK 189,750 493,300 0.1
TEXTILES & APPAREL
PT Gudang Garam
(Foreign) INDO 50,000 329,190 --
TOBACCO
--------------
51,375,831
--------------
Energy (7.0%)
- -----------------------------------------------
Centrais Electricas
Brasileiras S.A. -
Electrobras: BRZL -- -- 2.1
ELECTRICAL & GAS UTILITIES
Preferred B -- 34,699,900 13,279,701 --
Common -- 2,099,900 818,563 --
Preferred B New
(c) -- 1,900,244 727,226 --
Common New (c) -- 72,949 28,436 --
Bolivian Power (b) BOL 291,700 7,073,725 1.0
ELECTRICAL & GAS UTILITIES
Sasol Ltd. S AFR 754,100 6,675,948 0.9
ENERGY SOURCES
Manila Electric
Company (Meralco)
"B" PHIL 469,340 6,623,750 0.9
ELECTRICAL & GAS UTILITIES
C.A. La
Electricidad de
Caracas VENZ 2,778,317 5,425,890 0.8
ELECTRICAL & GAS UTILITIES
Yukong Ltd.: KOR -- -- 0.5
ENERGY EQUIPMENT & SERVICES
Common -- 51,729 3,402,462 --
New (c) -- 3,113 177,258 --
Electricidad de
Argentina 144A ADR
(b)(d) ARG 100,000 1,825,000 0.3
ELECTRICAL & GAS UTILITIES
Shandong Huaneng
Power Development
Company Ltd. ADR
(b) HK 161,200 1,732,900 0.2
ELECTRICAL & GAS UTILITIES
Madras Refineries
Limited IND 199,500 875,559 0.1
GAS PRODUCTION & DISTRIBUTION
Pakistan State Oil PAK 60,000 867,233 0.1
OIL
Dragon Oil PLC UK 24,000,000 686,948 0.1
OIL
--------------
50,220,599
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Miscellaneous/Conglomerate (6.6%)
- -----------------------------------------------
Grupo Carso, S.A.
de C.V. "A1": MEX -- -- 1.8
CONGLOMERATE
Common -- 1,130,000 $12,034,237 --
144A ADR (b)(d) -- 24,600 522,750 --
Malbak Limited S AFR 1,600,000 7,481,297 1.1
CONGLOMERATE
Straits Steamship
Land Ltd. SING 1,966,000 7,030,995 1.0
CONGLOMERATE
BPL Limited IND 624,200 4,582,381 0.6
MISCELLANEOUS
Commercial Del
Plata ARG 1,226,080 4,135,612 0.6
CONGLOMERATE
Desc Sociedad de
Fomento
Industrial, S.A.
de C.V. "B" MEX 419,000 3,100,991 0.4
CONGLOMERATE
KEC International IND 321,000 2,868,816 0.4
MISCELLANEOUS
PT Putra Surya
Perkasa (Foreign) INDO 1,303,500 1,935,445 0.3
MISCELLANEOUS
Grasim Industries
Limited 144A GDR
(b)(d) IND 70,000 1,706,250 0.2
CONGLOMERATE
Nicholas Piramel
India Ltd. IND 80,000 1,404,405 0.2
MISCELLANEOUS
--------------
46,803,179
--------------
Capital Goods (5.9%)
- -----------------------------------------------
Hindalco Industries
Ltd. 144A GDR
(b)(d) IND 210,000 7,350,000 1.0
INDUSTRIAL COMPONENTS
Empresas ICA
Sociedad
Controladora S.A.
de C.V. ADR (b) MEX 236,500 7,006,313 1.0
CONSTRUCTION
Uniphone
Telecommunica-
tions Bhd. MAL 2,037,500 4,985,076 0.7
TELECOM EQUIPMENT
Leader Universal
Holdings Bhd. MAL 749,000 4,163,554 0.6
INDUSTRIAL COMPONENTS
PT United Tractors
(Local) INDO 1,178,000 3,037,201 0.4
MACHINERY & ENGINEERING
Gujarat Telephone
Cable IND 1,050,000 2,597,351 0.4
TELECOM EQUIPMENT
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Netas Telekomunik TRKY -- -- 0.4
TELECOM EQUIPMENT
New (c) -- 4,001,400 $1,422,299 --
Common -- 3,201,120 1,137,839 --
Samsung
Construction
Company KOR 41,410 1,885,204 0.3
CONSTRUCTION
Taihan Electric
Wire Company KOR 38,421 1,239,075 0.2
INDUSTRIAL COMPONENTS
Dong-Ah
Construction
Industrial Company KOR 23,874 1,016,164 0.1
CONSTRUCTION
PT Supreme Cable
Manufac-
turing (Foreign) INDO 302,500 1,009,726 0.1
INDUSTRIAL COMPONENTS
Kukdong
Construction
Company KOR 53,930 991,910 0.1
CONSTRUCTION
Hyundai Precision
Industry Company KOR 25,698 783,436 0.1
MACHINERY & ENGINEERING
Kun Young
Construction Corp. KOR 36,000 761,905 0.1
CONSTRUCTION
Samsung Engineering
& Contruction New
(c) KOR 15,931 703,506 0.1
MACHINERY & ENGINEERING
Keppel Philippines
Holdings "B" PHIL 841,510 644,705 0.1
MACHINERY & ENGINEERING
Grupo Mexicano de
Desarrollo, S.A.
"L" ADR (b) MEX 31,810 644,153 0.1
CONSTRUCTION
Lucky Develop-
ment Company KOR -- -- 0.1
CONSTRUCTION
Common -- 25,000 579,491 --
New (c) -- 4,376 98,391 --
Kepphil Shipyard
Inc. PHIL 205,000 28,105 --
MACHINERY & ENGINEERING
--------------
42,085,404
--------------
Consumer Durables (4.5%)
- -----------------------------------------------
Samsung Electronics
Co. KOR -- -- 2.8
CONSUMER ELECTRONICS
Common -- 100,411 19,468,198 --
New (c) -- 3,778 732,498 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brasmotor S.A.
(Preferred) BRZL 11,340,000 $4,702,607 0.7
APPLIANCES & HOUSEHOLD DURABLE
Tofas Turk Otomobil
Fabrikasi 144A GDR
(b)(d) TRKY 861,180 3,173,448 0.4
AUTOMOBILES
Consorcio Grupo
Dina, S.A. de C.V.
ADR (b) MEX 133,700 1,721,388 0.2
AUTOMOBILES
Mando Machinery
Corporation KOR 20,000 1,493,575 0.2
AUTO PARTS
Daewoo Electronics
Company KOR 79,264 1,318,071 0.2
CONSUMER ELECTRONICS
Ciadea S.A. ARG 45 628 --
AUTOMOBILES
--------------
32,610,413
--------------
Finance (4.0%)
- -----------------------------------------------
City Developments
Ltd. SING 2,310,000 13,611,376 1.9
REAL ESTATE
Singapore Land Ltd. SING 438,000 2,819,550 0.4
REAL ESTATE
National Finance &
Securities Public
Co. (Foreign) THAI 411,000 2,407,945 0.3
SECURITIES BROKER
Hong Leong Finance
Bhd. (Foreign) MAL 630,000 2,403,270 0.3
OTHER FINANCIAL
Phatra Thanakit Co.
Ltd. (Foreign) THAI 228,800 2,350,434 0.3
INVESTMENT MANAGEMENT
Housing Development
Finance Corp. IND 24,320 2,134,695 0.3
OTHER FINANCIAL
PT Lippo Land
Development
(Foreign) INDO 618,250 1,053,188 0.1
REAL ESTATE
Boo Kook Securities
Co. (Preferred) KOR 58,140 878,912 0.1
SECURITIES BROKER
Tube Investment
Ltd. IND 105,000 854,612 0.1
OTHER FINANCIAL
Yu Hwa Security Co.
(Preferred) KOR 61,870 795,004 0.1
SECURITIES BROKER
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Lucky Securities
Company KOR 15,300 $481,204 0.1
SECURITIES BROKER
--------------
29,790,190
--------------
Health Care (0.8%)
- -----------------------------------------------
Ranbaxy
Laboratories Ltd. IND 225,200 4,708,139 0.7
MEDICAL TECHNOLOGY & SUPPLIES
Core Parenterals
(c) IND 29,400 365,975 0.1
PHARMACEUTICALS
--------------
5,074,114
--------------
Telecom Technology (0.3%)
- -----------------------------------------------
Himachal Telematics
Ltd. (c) IND 750,000 2,154,485 0.3
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Equity Investments
(cost $454,369,105)........................... 556,741,806 78.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Fixed Income Principal
Investments Currency Amount
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Government & Government Agency Obligations
(2.5%)
- -----------------------------------------------
Argentina (0.8%)
- -----------------------------------------------
Republic of
Argentina, FRB
Bond, 6.5% due
3/31/05 (f) USD 7,500,000 5,442,188 0.8
Philippines (0%)
- -----------------------------------------------
Republic of the
Philippines, Par
Bond Series B,
5.25% due 12/1/17
(g) USD 250,000 154,688 --
South Africa (0.7%)
- -----------------------------------------------
Republic of South
Africa, 11.5% due
5/30/00 ZAL 23,000,000 4,703,815 0.7
Venezuela (1.0%)
- -----------------------------------------------
Republic of
Venezuela, USD -- -- 1.0
Debt Conver-
sion Bond, 5.75%
due 12/18/07 (f) -- 10,000,000 4,837,500 --
Par Bond Series
A, 6.75% due
3/31/20 (e) -- 5,000,000 2,381,250 --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Government & Government Agency
Obligations
(cost $19,317,336)............................ 17,519,441 2.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Fixed Income Principal Market % of Net
Investments Currency Amount Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate Bonds (1.0%)
- -----------------------------------------------
India (0.6%)
- -----------------------------------------------
Global Mark
International
Ltd., 3.5% due
2/9/95 144A (d) USD 3,000,000 $3,300,000 0.5
Gujarat Tele-
phone Cable, 18%
due 8/5/99 INR 550,000 526,652 0.1
Korea (0.4%)
- -----------------------------------------------
Korea Development
Bank, 6.75% due
12/1/05 USD 3,000,000 2,536,500 0.4
Nigeria (0%)
- -----------------------------------------------
Central Bank of
Nigeria, Par Bond,
5.5% due 11/15/20
(g)(e) USD 500,000 195,313 --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Corporate Bonds
(cost $6,620,036)............................. 6,558,465 1.0
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Purchased Bank Debt (0.2%)
- -----------------------------------------------
Kingdom of Morocco,
Tranche A Loan
Agreement due
1/1/09 (cost
$1,077,060) USD 2,000,000 1,423,750 0.2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Fixed Income Investments
(cost $27,014,432)............................ 25,501,656 3.7
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Rights (3.7%) Country Shares
<S> <C> <C> <C> <C>
- -----------------------------------------------
Phatra Thanakit Co.
Ltd. (Foreign)
Rights expire
11/3/94 (c) THAI 1,703,200 16,813,291 2.4
INVESTMENT MANAGEMENT
National Finance &
Securities
(Foreign) Rights
expire 1/11/95 (c) THAI 1,233,000 5,986,878 0.8
SECURITIES BROKER
TPI Polene Company
Ltd. (Foreign)
Rights expire
11/15/94 (c) THAI 290,025 3,025,943 0.4
CHEMICALS
<CAPTION>
Market % of Net
Rights Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
PT Lippo Land
Development
(Foreign) Rights
expire 11/14/94
(c) INDO 1,236,250 $683,011 0.1
REAL ESTATE
Dragon Oil PLC
Right expire
11/4/94 (c) UK 923,077 3,774 --
OIL
Kun Young Con-
struction Corp.
Rights expire
11/4/94 (c) KOR 8,388 0 --
CONSTRUCTION
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Rights
(cost $13,430,700)............................ 26,512,897 3.7
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Warrants (0.1%)
- -----------------------------------------------
Tata Engineering &
Locomotive Co.
Ltd. Wts expire
8/3/96 (c) (cost
$416,003) IND 142,500 695,400 0.1
AUTOMOBILES
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Short-Term Investments
- --------------------------------
<S> <C> <C> <C> <C>
Repurchase Agreement (8.2%)
- -----------------------------------------------
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$27,980,000 Federal Home Loan Mortgage
Corporation Note, 8% due 1/1/23.(Market value
$27,187,233, including accrued interest.)
(cost $27,003,525)............................
27,003,525 3.8
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$22,450,000 First of America Mortgage Company
Note, 5.576% due 10/1/22.(Market value
$22,105,318, including accrued interest.)
(cost $22,002,872)............................
22,002,872 3.1
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$9,085,000 Federal National
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Short-Term Investments Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Association Note, 5.4% due
10/25/02.(Market value $8,944,183, including
accrued interest.) (cost $8,900,162)..........
$8,900,162 1.3
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Short-Term Investments (cost
$57,906,559).................................. 57,906,559 8.2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Market % of Net
Short-Term Investments Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Investments
(cost $555,021,876)*.......................... $667,358,318 94.2
Other Assets Less Liabilities.................. 41,252,751 5.8
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net Assets..................................... $708,611,069 100.0
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $708,611,069.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933.These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(e) Issued with detachable warrants or value recovery rights.The current market
value of each warrant or right is zero.
(f) The coupon rate shown on floating rate note represents the rate at period
end.
(g) The coupon rate shown on step-up coupon bond represents the rate at period
end.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
Wts -- Warrants
* For Federal income tax purposes, cost is $555,613,305 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 136,993,872
Unrealized depreciation: (25,248,859)
-------------
Net unrealized
appreciation: 111,745,013
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets(a)
--------------------------------------------------------------------------
Fixed Rights &
Country Equity Income Warrants Short- Term Other Total
- -------------------------- ----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Argentina................. 0.9 0.8 1.7
Bolivia................... 1.0 1.0
Brazil.................... 13.3 13.3
Chile..................... 0.1 0.1
Colombia.................. 0.8 0.8
Greece.................... 0.3 0.3
Hong Kong................. 0.2 0.2
India..................... 4.8 0.6 0.1 5.5
Indonesia................. 2.5 0.1 2.6
Korea..................... 10.3 0.4 10.7
Malaysia.................. 2.5 2.5
Mexico.................... 14.6 14.6
Morocco................... 0.2 0.2
Pakistan.................. 3.2 3.2
Peru...................... 1.2 1.2
Philippines............... 2.9 2.9
South Africa.............. 7.8 0.7 8.5
Singapore................. 4.0 4.0
Thailand.................. 6.0 3.6 9.6
Turkey.................... 1.2 1.2
UK........................ 0.1 0.1
U.S....................... 8.2 5.8 14.0
Venezuela................. 0.8 1.0 1.8
--- --- --- --- --- ---------
Total..................... 78.5 3.7 3.8 8.2 5.8 100.0
--- --- --- --- --- ---------
--- --- --- --- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $708,611,069.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Investments in securities, at value (cost $555,021,876) (Note 1).................................... $ 667,358,318
U.S. currency..........................................................................
$ 150
Foreign currency (cost $12,411,264)....................................................
12,312,922 12,313,072
-----------
Receivable for securities sold...................................................................... 22,957,730
Receivable for Fund shares sold..................................................................... 9,331,103
Dividends and dividend withholding tax reclaims receivable.......................................... 759,138
Interest receivable................................................................................. 755,992
Prepaid assets...................................................................................... 76,394
Cash held as collateral for securities loaned (Note 1).............................................. 16,637,500
-------------
Total assets........................................................................................ 730,189,247
-------------
Liabilities:
Payable for securities purchased.................................................................... 2,442,543
Payable for Fund shares repurchased................................................................. 1,205,551
Payable for investment management and administration fees (Note 2).................................. 570,798
Payable for service and distribution expenses (Note 2).............................................. 409,967
Payable for transfer agent fees (Note 2)............................................................ 159,352
Payable for professional fees....................................................................... 55,249
Payable for custodian fees (Note 1)................................................................. 31,429
Payable for registration fees....................................................................... 31,362
Payable for printing and postage expenses........................................................... 14,027
Payable for Directors' fees (Note 2)................................................................ 2,835
Accrued expenses.................................................................................... 17,565
Collateral for securities loaned (Note 1)........................................................... 16,637,500
-------------
Total liabilities................................................................................... 21,578,178
-------------
Net assets............................................................................................ $ 708,611,069
-------------
-------------
Class A:
Net asset value and redemption price per share
($417,321,830 DIVIDED BY 22,186,966 shares outstanding)............................................. $ 18.81
-------------
-------------
Maximum offering price per share
(100/95.25 of $18.81)*............................................................................... $ 19.75
-------------
-------------
Class B:+
Net asset value and offering price per share
($291,289,239 DIVIDED BY 15,593,963 shares outstanding)............................................. $ 18.68
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................................................ $ 569,916,241
Accumulated net realized gain on investments and foreign currency conversions....................... 26,390,953
Net unrealized appreciation of investments, dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold and foreign currency conversions.... 112,303,875
-------------
Total -- representing net assets applicable to capital shares outstanding........................... $ 708,611,069
-------------
-------------
</TABLE>
- ----------------
* 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.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income (net of foreign withholding tax of $887,782)......................................... $ 6,870,774
Interest income...................................................................................... 2,502,516
-------------
Total investment income.............................................................................. 9,373,290
-------------
Expenses:
Investment management and administration fees (Note 2)............................................... 4,702,869
Service and distribution expenses: (Note 2)
Class A.............................................................................. $ 1,530,305
Class B.............................................................................. 1,762,845 3,293,150
------------
Transfer agent fees (Note 2)......................................................................... 1,561,640
Custodian fees (Note 1).............................................................................. 850,844
Professional fees.................................................................................... 131,130
Registration fees.................................................................................... 117,269
Printing and postage expenses........................................................................ 92,960
Amortization of organizational expenses (Note 1)..................................................... 29,985
Directors' fees (Note 2)............................................................................. 9,940
Other................................................................................................ 9,123
-------------
Total expenses..................................................................................... 10,798,910
-------------
Net investment loss.................................................................................... (1,425,620)
-------------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized gain on investments....................................................... 45,679,995
Net realized loss on foreign currency conversions...................................... (17,446,074)
------------
Net realized gain.................................................................................... 28,233,921
Change in unrealized appreciation of dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold, and foreign currency
conversions........................................................................... 34,245
Change in unrealized appreciation of investments....................................... 81,938,011
------------
Net unrealized appreciation.......................................................................... 81,972,256
-------------
Net realized and unrealized gain on investments and foreign currencies................................. 110,206,177
-------------
Net increase in net assets resulting from operations................................................... $ 108,780,557
-------------
-------------
</TABLE>
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)................................................................. $ (1,425,620) $ 52,511
Net realized gain on investments and foreign currency conversions............................ 28,233,921 5,905,500
Change in unrealized appreciation (depreciation) of investments, dividends and dividend
withholding tax reclaims receivable, interest receivable, securities purchased and sold, and
foreign currency conversions................................................................ 81,972,256 31,607,262
---------------- ----------------
Net increase in net assets resulting from operations......................................... 108,780,557 37,565,273
---------------- ----------------
Class A:+
Distributions to shareholders from: (Note 1)
Net investment income........................................................................ 0 (632,778)
Net realized gains on investments............................................................ (4,115,024) 0
Class B:++
Distributions to shareholders from: (Note 1)
Net investment income........................................................................ 0 0
Net realized gains on investments............................................................ (1,126,597) 0
Capital share transactions (Note 4):
Increase from capital shares sold and reinvested............................................. 883,196,940 153,951,744
Decrease from capital shares repurchased..................................................... (498,150,727) (55,415,883)
---------------- ----------------
Net increase from capital share transactions................................................. 385,046,213 98,535,861
---------------- ----------------
Total increase in net assets................................................................... 488,585,149 135,468,356
Net assets:
Beginning of year............................................................................ 220,025,920 84,557,564
---------------- ----------------
End of year.................................................................................. $ 708,611,069* $ 220,025,920**
----------------
---------------- ----------------
----------------
</TABLE>
- ----------------
* Including undistributed net investment income of $0.
** Including undistributed net investment income of $(31,693).
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------
MAY 18, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
----------------------------------- OPERATIONS) TO
1994 1993 OCTOBER 31, 1992
---------------- ---------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..... $ 14.42 $ 11.10 $ 11.43
---------------- ---------------- --------
Income from investment operations:
Net investment income (loss)........... (0.02) 0.02* 0.07*
Net realized and unrealized gain (loss)
on investments........................ 4.68 3.38 (0.40)
---------------- ---------------- --------
Net increase (decrease) from investment
operations............................ 4.66 3.40 (0.33)
---------------- ---------------- --------
Distributions:
Net investment income.................. (0.01) (0.08) (0.00)
Net realized gain on investments....... (0.26) (0.00) (0.00)
---------------- ---------------- --------
Total distributions.................. (0.27) (0.08) (0.00)
---------------- ---------------- --------
Net asset value, end of period........... $ 18.81 $ 14.42 $ 11.10
---------------- ---------------- --------
---------------- ---------------- --------
Total investment return (c).............. 32.58% 30.9% (2.9)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)..... $417,322 $187,808 $84,558
Ratio of net investment income (loss) to
average net assets...................... (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net
assets.................................. 2.06% 2.4%* 2.4%*(b)
Portfolio turnover rate+++............... 100% 99% 32%(b)
<CAPTION>
CLASS B++
-----------------------------------
YEAR ENDED APRIL 1, 1993 TO
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..... $ 14.39 $ 11.47
---------------- --------
Income from investment operations:
Net investment income (loss)........... (0.12) 0.00**
Net realized and unrealized gain (loss)
on investments........................ 4.67 2.92
---------------- --------
Net increase (decrease) from investment
operations............................ 4.55 2.92
---------------- --------
Distributions:
Net investment income.................. (0.00) (0.00)
Net realized gain on investments....... (0.26) (0.00)
---------------- --------
Total distributions.................. (0.26) (0.00)
---------------- --------
Net asset value, end of period........... $ 18.68 $ 14.39
---------------- --------
---------------- --------
Total investment return (c).............. 31.77% 25.5%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)..... $291,289 $32,318
Ratio of net investment income (loss) to
average net assets...................... (0.61)% (0.4)%**(b)
Ratio of expenses to average net
assets.................................. 2.56% 2.9%**(b)
Portfolio turnover rate+++............... 100% 99%
</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 G.T. Capital Management, Inc. of Fund operating
expenses of $0.02 for the year ended October 31, 1993 and for the period
from May 18, 1992 to October 31, 1992, respectively. Without such
reimbursements, the expense ratios would have been 2.61% and 2.91% and the
ratio of net investment income to average net assets would have been 0.36%
and 1.21% for the year ended October 31, 1993 and for the period from May
18, 1992 to October 31, 1992, respectively (See Note 2).
** Includes reimbursement by G.T. Capital Management, Inc. of Fund operating
expenses of $0.02. Without such reimbursement, the expense ratio would have
been 3.63% and the ratio of net investment income to average net assets
would have been (0.76)% (See Note 2).
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Emerging Markets Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has eleven series of shares in operation, each series corresponding
to a distinct portfolio of investments. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of the financial statements. The policies are in conformity with
generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or, in the principal over-the-counter market in
which such securities are traded as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rate, except that when an occurrence subsequent to the time
a value was so established is likely to have materially changed such value, then
the fair value of those securities will be determined by consideration of other
factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, other assets and liabilities are recorded
in the books and records of the Fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined using
historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when accrued or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currency conversions, currency gains or losses realized between the
trade and settlement dates on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities at fiscal year end, resulting from changes in the exchange rate.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
accrued interest, is at least equal to the amount to be repaid to the Fund under
each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in market value is recorded by
the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases or sales of securities or to hedge
the value of portfolio securities denominated in a foreign currency.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on an identified
cost basis. Dividends are recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. Where a high level of uncertainty exists as to
its collection, income is recorded net of all withholding tax with any rebate
recorded when received. The Fund may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Fund to subsequently invest at less
advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $15,568,187
were on loan to brokers. The loans were secured by cash collateral of
$16,637,500 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1994, the Fund received fees of $79,949 which were
used to reduce the Fund's custodian fees.
(G) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(H) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(I) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $61,975. These expenses
are being amortized on a straightline basis over a five-year period.
(J) ADOPTION OF AICPA STATEMENT OF POSITION 93-2
As of November 1, 1993, the Fund adopted Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
Accordingly, permanent book and tax basis differences relating to shareholder
distributions have been reclassified. As of November 1, 1993, the cumulative
effect of such differences totaling $31,693 was reclassified from accumulated
net realized gains on investments to accumulated net investment loss. Net
investment loss, net realized gain on investments and net assets were not
affected by this change. The Statement of Changes in Net Assets and the
Financial Highlights, for the prior periods, have not been restated to reflect
the changes in this presentation.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent with
investments of domestic origin. The Fund's investment in emerging market
countries may involve greater risks than investments in more developed
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
markets and the price of such investments may be volatile. These risks of
investing in foreign and emerging markets may include foreign currency exchange
rate fluctuations, perceived credit risk, adverse political and economic
developments and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% on the first $500 million of average daily net assets of the
Fund; 0.95% on the next $500 million; 0.925% on the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A shares and
Class B shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1994, G.T. Global retained
$460,124 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1994, G.T. Global collected CDSCs in the amount of $433,744. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% and 2.90% of the average daily net
assets of the Fund's Class A and Class B shares, respectively. If necessary,
this limitation will be effected by waivers by G.T. Capital of investment
management and administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Statement of Additional Information Page 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, 1994, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $728,291,850 and $439,206,871, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the year
ended October 31, 1994.
4. CAPITAL SHARES
At October 31, 1994, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund (inactive); and 2,800,000,000 shares remain
unclassified. The shares of each of the foregoing series of the Company were
divided equally into two classes, designated Class A and Class B common stock.
Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold................................................................. 31,738,988 $ 542,276,829 9,808,710 $ 123,536,904
Shares issued in connection with reinvestment of distributions.............. 224,680 3,671,269 45,800 489,150
----------- ------------- ---------- -------------
31,963,668 545,948,098 9,854,510 124,026,054
Shares repurchased.......................................................... (22,802,389) (390,541,648) (4,443,274) (55,156,891)
----------- ------------- ---------- -------------
Net increase................................................................ 9,161,279 $ 155,406,450 5,411,236 $ 68,869,163
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
APRIL 1, 1993
YEAR ENDED TO
OCTOBER 31, 1994 OCTOBER 31, 1993
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold................................................................. 19,746,670 $ 336,338,827 2,257,605 $ 29,925,689
Shares issued in connection with reinvestment of distributions.............. 55,761 910,015 0 0
----------- ------------- ---------- -------------
19,802,431 337,248,842 2,257,605 29,925,689
Shares repurchased.......................................................... (6,446,858) (107,609,079) (19,215) (258,992)
----------- ------------- ---------- -------------
Net increase................................................................ 13,355,573 $ 229,639,763 2,238,390 $ 29,666,697
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 18, 1992
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
OCTOBER 31, 1993 TO OCTOBER 31, 1992
---------------- -----------------------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income........................................................... $ 52,511 $ 548,573
Net realized gain (loss) on investments and foreign currency conversions........ 5,905,500 (1,045,522)
Unrealized appreciation (depreciation) of dividends and dividend withholding tax
reclaims receivable, interest receivable, securities purchased and sold, and
foreign currency............................................................... (75,090) 8,278
Unrealized appreciation (depreciation) of investments........................... 31,682,352 (1,283,921)
---------------- ---------------
Net increase (decrease) in net assets resulting from operations................. 37,565,273 (1,772,592)
---------------- ---------------
Class A+
Distributions to shareholders from (Note 1):
Net investment income........................................................... (632,778) (0)
Capital share transactions (Note 4):
Increase from capital shares sold and reinvested................................ 153,951,744 100,469,194
Decrease from capital shares repurchased........................................ (55,415,883) (14,239,038)
---------------- ---------------
Net increase from capital share transactions...................................... 98,535,861 86,230,156
---------------- ---------------
Total increase in net assets...................................................... 135,468,356 84,457,564
Net assets:
Beginning of year............................................................... 84,557,564 100,000
---------------- ---------------
End of year..................................................................... $ 220,025,920 $ 84,557,564
---------------- ---------------
---------------- ---------------
</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. There were no Class B distributions made to Class B
shareholders for the seven month period ended October 31, 1993.
Statement of Additional Information Page 57
<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 and market price
data for the shares.
<TABLE>
<CAPTION>
CLASS B+ CLASS A++
---------------- -----------------------------------------------
APRIL 1, 1993 MAY 18, 1992
TO YEAR ENDED (COMMENCEMENT OF OPERATIONS)
OCTOBER 31, 1993 OCTOBER 31, 1993 TO OCTOBER 31, 1992
---------------- ---------------- ----------------------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year............................. $ 11.47 $ 11.10 $ 11.43
-------- ---------------- --------
Net investment income.......................................... 0.00** 0.02* 0.07*
Net realized and unrealized gain (loss) on investments......... 2.92 3.38 (0.40)
-------- ---------------- --------
Net increase (decrease) in net asset value resulting from
investment operations........................................ 2.92 3.40 (0.33)
-------- ---------------- --------
Distributions:
Net investment income........................................ (0.00) (0.08) (0.00)
-------- ---------------- --------
Total distributions........................................ (0.00) (0.08) (0.00)
-------- ---------------- --------
Net asset value, end of year................................... $ 14.39 $ 14.42 $ 11.10
-------- ---------------- --------
-------- ---------------- --------
Total investment return........................................ 25.5%(a) 30.9% (2.9)%(a)
-------- ---------------- --------
-------- ---------------- --------
Ratios and supplemental data:
Net assets, end of year (in 000's)............................. $32,218 $187,808 $84,558
Ratio of net investment income to average net assets........... (0.4)%**(b) 0.1%* 1.7%*(b)
Ratio of expenses to average net assets........................ 2.9%**(b) 2.4%* 2.4%*(b)
Portfolio turnover rate +++.................................... 99% 99% 32%(b)
</TABLE>
- --------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund Class A
shares operating expenses of $0.02 for the year ended October 31, 1993 and
for the period from May 18, 1992 (commencement of operations) to October 31,
1992. Without such reimbursement, the expense ratios would have been 2.61%
and 2.91% and the ratio of net investment income to average net assets would
have been 0.36% and 1.21% for the year ended October 31, 1993 and for the
period from May 18, 1992 (commencement of operations) to October 31, 1992,
respectively (See Note 2).
** Includes reimbursement by G.T. Capital Management, Inc. of Fund Class B
shares operating expenses of $0.02. Without such reimbursement, the expense
ratio would have been 3.11% and the ratio of net investment income to
average net assets would have been (0.8)% (See Note 2).
(a) Not annualized
(b) Annualized.
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
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 61
<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 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 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,
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 GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
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, 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.
EMESA601MC
