<PAGE>
GT GLOBAL THEME FUNDS:
ADVISOR CLASS
PROSPECTUS -- FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GT GLOBAL FINANCIAL SERVICES FUND GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
GT GLOBAL INFRASTRUCTURE FUND GT GLOBAL HEALTH CARE FUND
GT GLOBAL NATURAL RESOURCES FUND GT GLOBAL TELECOMMUNICATIONS FUND
</TABLE>
The GT GLOBAL HEALTH CARE FUND ("HEALTH CARE FUND") seeks its investment
objective of long-term capital appreciation by investing primarily in securities
of health care companies throughout the world.
The GT GLOBAL TELECOMMUNICATIONS FUND ("TELECOMMUNICATIONS FUND") seeks its
investment objective of long-term growth of capital by investing primarily in
securities of companies throughout the world engaged in development, manufacture
or sale of telecommunications services or equipment.
The GT GLOBAL FINANCIAL SERVICES FUND ("FINANCIAL SERVICES FUND"), GT GLOBAL
INFRASTRUCTURE FUND ("INFRASTRUCTURE FUND"), GT GLOBAL NATURAL RESOURCES FUND
("NATURAL RESOURCES FUND") and GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
("CONSUMER PRODUCTS AND SERVICES FUND") seek their investment objectives of
long-term capital growth by investing all of their investable assets in their
corresponding Portfolios, each of which invests in securities of companies
throughout the world that operate in their respective theme industries.
The Global Financial Services Portfolio ("Financial Services Portfolio") invests
primarily in securities of companies throughout the world that operate within
the financial services industries.
The Global Infrastructure Portfolio ("Infrastructure Portfolio") invests
primarily in securities of companies throughout the world that design, develop
or provide products and services significant to a country's infrastructure.
The Global Natural Resources Portfolio ("Natural Resources Portfolio") invests
primarily in securities of companies throughout the world that own, explore or
develop natural resources and other basic commodities, or supply goods and
services to such companies.
The Global Consumer Products and Services Portfolio ("Consumer Products and
Services Portfolio") invests primarily in securities of companies throughout the
world that manufacture, market, retail or distribute consumer products and
services.
Collectively, the above-named Funds are known as the "GT Global Theme Funds,"
and the Portfolios are known individually as a "Portfolio" and collectively as
the "Portfolios."
Each Portfolio's investment objective is identical to that of its corresponding
Fund. As this structure is different from many other investment companies which
directly acquire and manage their own portfolios, investors should carefully
consider this investment approach. For additional information on the Funds, the
Portfolios and the theme industries in which the GT Global Theme Funds invest,
see "Investment Objectives and Policies" and "Management."
There can be no assurance that any Fund or Portfolio will achieve its investment
objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Funds and the Portfolios are managed and/or administered by LGT Asset
Management, Inc. ("LGT Asset Management"). LGT Asset Management and its
worldwide affiliates are part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services to individual
and institutional investors.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated February 29, 1996, has been filed
with the Securities and Exchange Commission and, as supplemented or amended from
time to time, is incorporated by reference. The Statement of Additional
Information is available without charge by writing to the Funds at 50 California
Street, 27th Floor, San Francisco 94111, or by calling (800) 824-1580.
FOR FURTHER INFORMATION, CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
GT GLOBAL THEME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 9
Investment Objective and Policies......................................................... 15
Risk Factors.............................................................................. 23
How to Invest............................................................................. 31
How to Make Exchanges..................................................................... 32
How to Redeem Shares...................................................................... 33
Shareholder Account Manual................................................................ 35
Calculation of Net Asset Value............................................................ 36
Dividends, Other Distributions and Federal Income Taxation................................ 36
Management................................................................................ 38
Other Information......................................................................... 44
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in this
summary are to headings in the body of the Prospectus.
<TABLE>
<S> <C> <C>
Investment Objective: Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund seek long-term
capital growth. The Health Care Fund seeks long-term capital
appreciation. The Telecommunications Fund seeks long-term growth
of capital
Principal Investments: Financial Services Fund invests all of its investable assets in
the Financial Services Portfolio, that, in turn, invests primarily
in equity securities of companies throughout the world that
operate in the financial services industry
Infrastructure Fund invests all of its investable assets in the
Infrastructure Portfolio, that, in turn, invests primarily in
equity securities of companies throughout the world that design,
develop or provide products and services significant to a
country's infrastructure
Natural Resources Fund invests all of its investable assets in the
Natural Resources Portfolio, that, in turn, invests primarily in
equity securities of companies throughout the world that own,
explore or develop natural resources and other basic commodities,
or supply goods and services to such companies
Consumer Products and Services Fund invests all of its investable
assets in the Consumer Products and Services Portfolio, that, in
turn, invests primarily in equity securities of companies
throughout the world that manufacture, market, retail or
distribute consumer products and services
Health Care Fund invests primarily in equity securities of health
care companies throughout the world
Telecommunications Fund invests primarily in equity securities of
companies throughout the world engaged in development, manufacture
or sale of telecommunications services or equipment
Investment Manager: LGT Asset Management, part of Liechtenstein Global Trust, a
provider of global asset management and private banking products
and services to individual and institutional investors, entrusted
with approximately $45 billion in total assets
Advisor Class shares are offered through this Prospectus to (a)
Advisor Class Shares: trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least
$25,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of at least $25,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
by one of the companies comprising or affiliated with
Liechtenstein Global Trust; and (e) any of the companies
comprising or affiliated with Liechtenstein Global Trust
Exchange Privileges: Advisor Class shares of a Fund may only be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by LGT
Asset Management
Dividends and Other
Distributions: Dividends paid annually from net investment income and realized
net short-term capital gains; other distributions paid annually
from net capital gain and net gains from foreign currency
transactions, if any
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the distributing Fund or in Advisor
Class shares of other GT Global Mutual Funds
Net Asset Values: Advisor Class shares of the Health Care Fund, Telecommunications
Fund, Infrastructure Fund, Financial Services Fund, Natural
Resources Fund and Consumer Products and Services Fund are
expected to be quoted daily in the financial section of most
newspapers
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
INVESTMENT MANAGER AND ADMINISTRATOR. LGT Asset Management and its worldwide
asset management affiliates maintain fully-staffed investment offices in San
Francisco, London, Hong Kong, Tokyo, Singapore, Sydney and Frankfurt. LGT Asset
Management is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors. As of December 31, 1995, assets entrusted to
Liechtenstein Global Trust totaled approximately $45 billion. The companies
comprising Liechtenstein Global Trust are indirect subsidiaries of the Prince of
Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVE AND POLICIES. The Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund seek
long-term capital growth, the Telecommunications Fund seeks long-term growth of
capital and the Health Care Fund seeks long-term capital appreciation. Each Fund
is hereinafter referred to individually as a "Fund" and collectively as "Funds."
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Consumer Products and Services Fund and Telecommunications Fund are mutual funds
organized as diversified series, and the Health Care Fund as a non-diversified
series, of G.T. Investment Funds, Inc. (the "Company"). The Financial Services
Portfolio, Infrastructure Portfolio, Natural Resources Portfolio, Consumer
Products and Services Portfolio, Health Care Fund and Telecommunications Fund
are hereinafter referred to individually as a "Theme Portfolio," or
collectively, "Theme Portfolios."
The Financial Services Fund seeks its investment objective by investing all of
its investable assets in the Financial Services Portfolio that, in turn,
normally invests at least 65% of its total assets in common and preferred stocks
and warrants to acquire such securities issued by financial services companies
throughout the world. See "Investment Objective and Policies."
The Infrastructure Fund seeks its investment objective by investing all of its
investable assets in the Infrastructure Portfolio that, in turn, normally
invests at least 65% of its total assets in common and preferred stocks and
warrants to acquire such securities issued by companies throughout the world
that design, develop or provide products and services significant to a country's
infrastructure. See "Investment Objective and Policies."
The Natural Resources Fund seeks its investment objective by investing all of
its investable assets in the Natural Resources Portfolio that, in turn, normally
invests at least 65% of its total assets in common and preferred stocks and
warrants to acquire such securities issued by companies throughout the world
that own, explore or develop natural resources and other basic commodities, or
supply goods and services to such companies. See "Investment Objective and
Policies."
The Consumer Products and Services Fund seeks its investment objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio that, in turn, normally invests at least 65% of its total assets in
common and preferred stocks and warrants to acquire such securities issued by
companies throughout the world that manufacture, market, retail or distribute
consumer products and services. See "Investment Objective and Policies."
The Health Care Fund seeks its investment objective by normally investing at
least 65% of its total assets in common and preferred stocks and warrants to
acquire such securities issued by health care companies throughout the world.
See "Investment Objective and Policies."
The Telecommunications Fund seeks its investment objective by normally investing
at least 65% of its total assets in common and preferred stocks and warrants to
acquire such securities issued by companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
See "Investment Objective and Policies."
The remainder of each of the foregoing Theme Portfolio's assets may be invested
in debt securities issued by companies in their respective industries and/or in
equity and debt securities of companies outside those industries, which, in the
opinion of
Prospectus Page 5
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
LGT Asset Management, stand to benefit from developments in those industries.
LGT Asset Management believes that a portfolio of securities of companies
operating in one of the industries described above located throughout the world
presents greater potential for long-term capital growth and appreciation than a
portfolio comprising solely securities of U.S. issuers.
INVESTMENT TECHNIQUES AND RISK FACTORS. Each Theme Portfolio may engage in
certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its
present or planned investments. The Theme Portfolios' participation in the
currency, options and futures markets involves certain risks and transaction
costs.
Each Theme Portfolio may borrow an amount up to 33 1/3% of its total assets in
order to meet redemption requests. This may cause greater fluctuation in the
value of a Fund's shares than would be the case if the Theme Portfolio did not
borrow, but also may enable the Theme Portfolio to retain favorable securities
positions rather than liquidating such positions to meet redemption needs. Each
Theme Portfolio also is authorized to lend securities to broker/dealers or to
other institutional investors.
The Financial Services Portfolio, Health Care Fund and Telecommunications Fund
may each invest up to 5%, and the Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio may each invest up to 20%
of its total assets in below investment grade debt securities, which may include
(i) corporate debt securities and (ii) debt instruments issued by governments.
Investments of this type are subject to a greater risk of loss of principal and
interest.
Each Theme Portfolio's policy of concentrating its investments in companies in
its particular industries may cause a Fund's net asset value to fluctuate more
than if it invested in a greater number of industries.
Investments in foreign securities involve risks relating to political and
economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also
may differ favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates will affect the Funds' net asset value, earnings and
gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies.
There is no assurance that the Funds or the Portfolios will achieve their
investment objective. Each Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its securities holdings.
Investors should review the investment objective and policies of the Theme
Portfolios carefully and consider their ability to assume these and other risks
involved in purchasing shares of a particular Fund.
PURCHASES AND REDEMPTIONS. Advisor Class shares of each Fund's common stock are
available through Financial Advisors (as defined herein) who have entered into
agreements with the Fund's distributor, GT Global, Inc. ("GT Global") or certain
of its affiliates. See "How to Invest" and "Shareholder Account Manual." Shares
may be redeemed through the Funds' transfer agent, GT Global Investor Services,
Inc. ("Transfer Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Prospectus Page 6
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Funds and the aggregate annual
operating expenses for the Funds and the Portfolios are reflected in the
following tables*:
<TABLE>
<CAPTION>
GT GLOBAL GT GLOBAL GT GLOBAL
HEALTH CARE TELECOMMUNICATIONS FINANCIAL SERVICES
FUND FUND FUND
--------------- --------------------- -------------------
ADVISOR CLASS ADVISOR CLASS ADVISOR CLASS
--------------- --------------------- -------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(% of offering price)................................ None None None
Sales charges on reinvested distributions to
shareholders......................................... None None None
Deferred sales charges................................. None None None
Redemption charges..................................... None None None
Exchange fees:
-- On first four exchanges each year............... None None None
-- On each additional exchange..................... $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......... 0.98% 0.93% 0.98%
12b-1 service and distribution expenses................ None None None
Other expenses (after reimbursements).................. 0.43% 0.40% 0.92%
------- ------- -------
Total Fund Operating Expenses.......................... 1.41% 1.33% 1.90%
------- ------- -------
------- ------- -------
<CAPTION>
GT GLOBAL GT GLOBAL GT GLOBAL
INFRASTRUCTURE NATURAL RESOURCES CONSUMER PRODUCTS
FUND FUND AND SERVICES FUND
--------------- --------------------- -------------------
ADVISOR CLASS ADVISOR CLASS ADVISOR CLASS
--------------- --------------------- -------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(% of offering price)................................ None None None
Sales charges on reinvested distributions to
shareholders......................................... None None None
Deferred sales charges................................. None None None
Redemption charges..................................... None None None
Exchange fees:
-- On first four exchanges each year............... None None None
-- On each additional exchange..................... $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......... 0.98% 0.98% 0.98%
12b-1 service and distribution expenses................ None None None
Other expenses (after reimbursements).................. 0.92% 0.92% 0.92%
------- ------- -------
Total Fund Operating Expenses.......................... 1.90% 1.90% 1.90%
------- ------- -------
------- ------- -------
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return:
<TABLE>
<CAPTION>
GT GLOBAL GT GLOBAL GT GLOBAL
HEALTH CARE TELECOMMUNICATIONS FINANCIAL SERVICES
FUND FUND FUND
--------------------------- ---------------------------- -----------------------------
ONE THREE FIVE TEN ONE THREE FIVE TEN ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ---- ----- ----- ---- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisor Class Shares............... $13 $44 $ 98 $177 $13 $ 42 $ 93 $167 $ 18 $ 60 $125 $239
</TABLE>
<TABLE>
<CAPTION>
GT GLOBAL
GT GLOBAL GT GLOBAL CONSUMER PRODUCTS
INFRASTRUCTURE NATURAL RESOURCES AND
FUND FUND SERVICES FUND
--------------------------- ---------------------------- -----------------------------
ONE THREE FIVE TEN ONE THREE FIVE TEN ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ---- ----- ----- ---- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisor Class Shares............... $18 $60 $125 $239 $18 $ 60 $125 $239 $ 18 $ 60 $125 $239
</TABLE>
- --------------
* BECAUSE ADVISOR CLASS SHARES WERE NOT OFFERED PRIOR TO JUNE 1, 1995,
EXPENSES ARE ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES.
SUCH DATA ARE DERIVED FROM CLASS A AND CLASS B SHARE EXPENSES FOR THE HEALTH
CARE FUND, TELECOMMUNICATIONS FUND, FINANCIAL SERVICES FUND, INFRASTRUCTURE
FUND AND NATURAL RESOURCES FUND AND THEIR CORRESPONDING PORTFOLIOS, AND ARE
BASED ON THE FUNDS' FISCAL YEAR ENDED OCTOBER 31, 1995. BECAUSE THE CONSUMER
PRODUCTS AND SERVICES FUND AND ITS CORRESPONDING PORTFOLIO COMMENCED
OPERATIONS ONLY ON DECEMBER 30, 1994, "OTHER EXPENSES" ARE BASED ON
ESTIMATED AMOUNTS FOR THE FIRST YEAR OF OPERATIONS OF SUCH FUND AND ITS
PORTFOLIO. THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS.
"Other expenses" include custody, transfer agent, legal, audit and other
operating expenses. See "Management" herein and the Statement of Additional
Information for more information. Without reimbursements, "Investment
management and administration fees," "Other expenses" and "Total Fund
Operating Expenses" for Advisor Class shares are estimated to be 0.98%,
7.67%, and 8.64% for Financial Services Fund and its corresponding
Portfolio, 0.98%, 1.15%, and 2.12% for Infrastructure Fund and its
corresponding Portfolio, 0.98%, 2.0%, and 2.97% for Natural Resources Fund
and its corresponding Portfolio, and 0.98%, 12.16% and 13.13% for Consumer
Products and Services Fund and its corresponding Portfolio. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies comprising or affiliated with Liechtenstein Global Trust invests
in Advisor Class shares of a Fund, such account shall not be subject to
duplicative advisory fees. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT
A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUNDS' AND THE PORTFOLIOS'
ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The above table and the assumption in the Hypothetical Example of a 5%
annual return are required by regulation of the Securities and Exchange
Commission applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Funds' or the Portfolios' projected
or actual performance.
The Annual Fund Operating Expenses for the Consumer Products and Services
Fund and its corresponding Portfolio are annualized projections based upon
current administration fees for the Fund and management and administration
fees for the Portfolio and estimated amounts for Other expenses. The Board
of Directors of the Company believes that the aggregate per share expenses
of the Financial Services Fund, Infrastructure Fund, Natural Resources Fund
and Consumer Products and Services Fund and each of their corresponding
Portfolios will be approximately equal to the expenses such Fund would incur
if its assets were invested directly in the type of securities being held by
its corresponding Portfolio. If investors other than such Fund invest in its
corresponding Portfolio, such Funds could achieve economies of scale which
could reduce expenses.
Prospectus Page 8
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one share of each class of shares of each Fund for the
periods shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes for the fiscal year ended October 31, 1995, have
been audited by Coopers & Lybrand, L.L.P., independent accountants, whose report
thereon is also included in the Statement of Additional Information.
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------
AUGUST 7,
1989
(COMMENCEMENT
OF
YEAR ENDED OCTOBER 31, OPERATIONS)
-------------------------------------------------------------- TO OCTOBER
1995* 1994* 1993* 1992 1991 1990 31, 1989
-------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83 $ 11.43
-------- -------- -------- -------- -------- -------- -------------
Income from investment
operations:
Net investment income
(loss)..................... (0.15) (0.22) (0.15) (0.18) 0.03 0.06 0.01
Net realized and unrealized
gain (loss) on
investments................ 3.73 2.02 0.57 (1.53) 6.78 0.97 0.39
-------- -------- -------- -------- -------- -------- -------------
Net increase (decrease) from
investment operations...... 3.58 1.80 0.42 (1.71) 6.81 1.03 0.40
-------- -------- -------- -------- -------- -------- -------------
Distributions:
Net investment income....... (0.00) (0.00) (0.00) (0.00) (0.07) (0.03) (0.00)
Net realized gain on
investments................ (1.34) (0.00) (0.00) (0.14) (0.28) (0.00) (0.00)
In excess of net realized
gain on investments........ (0.00) (0.06) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------------
Total distributions....... (1.34) (0.06) (0.00) (0.14) (0.35) (0.03) (0.00)
-------- -------- -------- -------- -------- -------- -------------
Net asset value, end of
period....................... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------- -------------
Total investment return (c)... 19.79% 10.11% 2.4% (8.9)% 54.2% 8.7% 3.5%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................... $426,380 $438,940 $461,113 $655,867 $552,897 $145,544 $49,903
Ratio of net investment income
(loss) to average net
assets....................... (0.72)% (1.23)% (0.90)% (0.97)% 0.19% 0.66% 3.2%(b)
Ratio of expenses to average
net assets:
With expense reduction...... 1.85% 1.98% 2.0% 2.05% 2.01% 2.39% 2.5%(b)
Without expense reduction... 1.91% -%(d) -%(d) -%(d) -%(d) -%(d) -%(d)
Portfolio turnover rate +++... 99% 64% 61% 30% 23% 34% 183%(b)
<CAPTION>
ADVISOR
CLASS B++ CLASS**
----------------------------- ------------
YEAR ENDED APRIL 1, JUNE 1, 1995
OCTOBER 31, 1993 TO
---------------- TO OCTOBER OCTOBER 31,
1995* 1994* 31, 1993* 1995
------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 19.46 $ 17.80 $ 15.59 $ 18.66
------- ------- ----------- ------------
Income from investment
operations:
Net investment income
(loss)..................... (0.25) (0.32) (0.14) (0.02)
Net realized and unrealized
gain (loss) on
investments................ 3.69 2.02 2.35 3.24
------- ------- ----------- ------------
Net increase (decrease) from
investment operations...... 3.44 1.70 2.21 3.22
------- ------- ----------- ------------
Distributions:
Net investment income....... (0.00) (0.00) (0.00) 0.00
Net realized gain on
investments................ (1.34) (0.00) (0.00) 0.00
In excess of net realized
gain on investments........ (0.00) (0.04) (0.00) 0.00
------- ------- ----------- ------------
Total distributions....... (1.34) (0.04) (0.00) 0.00
------- ------- ----------- ------------
Net asset value, end of
period....................... $ 21.56 $ 19.46 $ 17.80 $ 21.88
------- ------- ----------- ------------
------- ------- ----------- ------------
Total investment return (c)... 19.17% 9.55% 14.2%(a) 17.10%(a)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................... $70,740 $39,100 $ 8,604 $ 539
Ratio of net investment income
(loss) to average net
assets....................... (1.22)% (1.73)% (1.40)%(b) (0.22)%(b)
Ratio of expenses to average
net assets:
With expense reduction...... 2.35% 2.48% 2.54%(b) 1.35%(b)
Without expense reduction... 2.41% -% ) -%(d) 1.41%(b)
Portfolio turnover rate +++... 99% 64% 61% 99%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratios of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
Prospectus Page 9
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------
<S> <C> <C> <C> <C>
JANUARY 27, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO
1995 1994(C) 1993 OCTOBER 31, 1992
---------- ---------- ---------- ----------------
Per Share Operating
Performance:
Net asset value, beginning
of period................. $ 17.80 $ 16.92 $ 11.16 $ 11.43
---------- ---------- ---------- ----------------
Income from investment
operations:
Net investment income
(loss).................. (0.09) (0.01) 0.08 0.14*
Net realized and
unrealized gain (loss)
on investments.......... (0.43) 1.17 5.83 (0.41)
---------- ---------- ---------- ----------------
Net increase (decrease)
from investment
operations.............. (0.52) 1.16 5.91 (0.27)
---------- ---------- ---------- ----------------
Distributions:
Net investment income.... (0.00) (0.01) (0.15) (0.00)
Net realized gain on
investments............. (0.86) (0.27) (0.00) (0.00)
---------- ---------- ---------- ----------------
Total distributions.... (0.86) (0.28) (0.15) (0.00)
---------- ---------- ---------- ----------------
Net asset value, end of
period.................... $ 16.42 $ 17.80 $ 16.92 $ 11.16
---------- ---------- ---------- ----------------
Total investment return
(d)....................... (2.88)% 7.02% 53.6% (2.4)%(a)
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................ $1,353,722 $1,644,402 $1,223,340 $442,862
Ratio of net investment
income to average net
assets.................... (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to
average net assets:
With expense
reductions.............. 1.77% 1.8% 2.0%(b) 2.3%*(b)
Without expense
reductions.............. 1.83% -%(e) -%(e) -%(e)
Portfolio turnover
rate+++................... 62% 57% 41% 4%(b)
<CAPTION>
CLASS B++ ADVISOR CLASS**
---------------------------------------- ----------------
<S> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, JUNE 1, 1995
---------------------- APRIL 1, 1993 TO TO
1995 1994(C) OCTOBER 31, 1993 OCTOBER 31, 1995
---------- ---------- ---------------- ----------------
Per Share Operating
Performance:
Net asset value, beginning
of period................. $ 17.66 $ 16.87 $ 12.68 $15.24
---------- ---------- ---------------- -------
Income from investment
operations:
Net investment income
(loss).................. (0.17) (0.10) 0.01 0.00
Net realized and
unrealized gain (loss)
on investments.......... (0.43) 1.17 4.18 1.22
---------- ---------- ---------------- -------
Net increase (decrease)
from investment
operations.............. (0.60) 1.07 4.19 1.22
---------- ---------- ---------------- -------
Distributions:
Net investment income.... (0.00) (0.01) (0.00) 0.00
Net realized gain on
investments............. (0.86) (0.27) (0.00) 0.00
---------- ---------- ---------------- -------
Total distributions.... (0.86) (0.28) (0.00) 0.00
---------- ---------- ---------------- -------
Net asset value, end of
period.................... $ 16.20 $ 17.66 $ 16.87 $16.46
---------- ---------- ---------------- -------
Total investment return
(d)....................... (3.37)% 6.50% 33.0%(a) 7.94%(a)
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................ $1,111,520 $1,184,081 $455,335 $ 681
Ratio of net investment
income to average net
assets.................... (0.99)% (0.52)% 0.3%(b) 0.01%(b)
Ratio of expenses to
average net assets:
With expense
reductions.............. 2.27% 2.3% 2.5%(b) 1.27%(b)
Without expense
reductions.............. 2.33% -%(e) -%(e) 1.33%(b)
Portfolio turnover
rate+++................... 62% 57% 41% 62%
</TABLE>
- --------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by LGT Asset Management of Fund operating expenses of
less than $0.01. Without such reimbursement, the annualized expense ratio
would have been 2.30% and the annualized ratio of net investment income to
average net assets would have been 2.04%.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
Prospectus Page 10
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
----------------------------- ----------------------------- ----------------
YEAR ENDED MAY 31, 1994 YEAR ENDED MAY 31, 1994 JUNE 1, 1995
OCTOBER COMMENCEMENT OF OCTOBER COMMENCEMENT OF TO
31, OPERATIONS) TO 31, OPERATIONS) TO OCTOBER 31,
1995(D) OCTOBER 31, 1994 1995(D) OCTOBER 31, 1994 1995
---------- ---------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.62 $ 11.43 $ 11.60 $ 11.43 $ 11.09
---------- -------- ---------- -------- --------
Income from investment operations:
Net investment income................. 0.17* 0.02* 0.11* 0.00* 0.09*
Net realized and unrealized gain on
investments.......................... 0.13 0.17 0.12 0.17 0.77
---------- -------- ---------- -------- --------
Net increase from investment
operations......................... 0.30 0.19 0.23 0.17 0.86
---------- -------- ---------- -------- --------
Net asset value, end of period.......... $ 11.92 $ 11.62 $ 11.83 $ 11.60 $ 11.95
---------- -------- ---------- -------- --------
---------- -------- ---------- -------- --------
Total investment return (b)............. 2.58% 1.66%(c) 1.98% 1.49%(c) 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,687 $ 3,175 $ 4,548 $ 2,235 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 1.46% 0.66%(a) 0.96% 0.16%(a) 1.96%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... (5.34)% (7.26)%(a) (5.84)% (7.76)%(a) (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from LGT Asset
Management........................... 2.34% 2.40%(a) 2.84% 2.90%(a) 1.84%(a)
Without expense reductions and
reimbursement from LGT Asset
Management........................... 9.14% 10.32%(a) 9.64% 10.82%(a) 8.64%(a)
</TABLE>
- ------------------
(a) Annualized.
(b) Total investment return does not include sales charges.
(c) Not annualized.
(d) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
* Before reimbursement by LGT Asset Management, the net investment income per
share would have been reduced by $0.59, $0.59 and $0.30 for Class A, Class
B, and Advisor Class, respectively, for the period ended October 31, 1995,
and $0.23 and $0.23 for Class A and Class B from May 31, 1994 to October 31,
1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Prospectus Page 11
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
----------------------------- ----------------------------- ----------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED COMMENCEMENT OF YEAR ENDED COMMENCEMENT OF TO
OCTOBER OPERATIONS) TO OCTOBER OPERATIONS) TO OCTOBER 31,
31, 1995 OCTOBER 31, 1994 31, 1995 OCTOBER 31, 1994 1995
---------- ---------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 11.43 $ 12.45 $ 11.43 $ 12.00
Income from investment operations:
---------- -------- ---------- -------- --------
Net investment income (loss).......... (0.03)* 0.01* (0.09)* (0.01)* 0.02*
Net realized and unrealized gain
(loss) on investments................ (0.33) 1.03 (0.33) 1.03 0.12
---------- -------- ---------- -------- --------
Net increase (decrease) from
investment operations.............. (0.36) 1.04 (0.42) 1.02 0.14
---------- -------- ---------- -------- --------
Net asset value, end of period.......... $ 12.11 $ 12.47 $ 12.03 $ 12.45 $ 12.14
---------- -------- ---------- -------- --------
---------- -------- ---------- -------- --------
Total investment return (c)............. (2.89)% 9.10%(b) (3.37)% 8.92%(b) 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $36,241 $23,615 $50,181 $30,954 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by LGT Asset
Management........................... (0.32)% 0.41%(a) (0.82)% (0.09)%(a) 0.18%(a)
Without expense reductions and
reimbursement by LGT Asset
Management........................... (0.58)% (0.47)%(a) (1.08)% (0.97)%(a) (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by LGT Asset
Management........................... 2.36% 2.40%(a) 2.86% 2.90%(a) 1.86%(a)
Without expense reductions and
reimbursement by LGT Asset
Management........................... 2.62% 3.28%(a) 3.12% 3.78%(a) 2.12%(a)
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by LGT Asset Management, the net investment income per
share would have been reduced by $0.03 for Class A shares, $0.03 for Class B
shares, and $0.02 for Advisor Class for the period ended October 31, 1995.
Net investment income per share would have been reduced by $0.02 for Class A
and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Prospectus Page 12
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------- ------------
MAY 31, 1994
YEAR ENDED COMMENCEMENT OF YEAR ENDED
OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995 OCTOBER 31, 1994 1995
------------ -------------------- ------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................... $ 12.41 $ 11.43 $ 12.38
------------ -------- ------------
Income from investment operations:
Net investment income (loss)............................... 0.04* 0.06* (0.02)*
Net realized and unrealized gain (loss) on investments..... (0.98) 0.92 (0.98)
------------ -------- ------------
Net increase (decrease) from investment operations....... (0.94) 0.98 (1.00)
------------ -------- ------------
Distributions to shareholders:
From net investment income................................. (0.03) 0.00 (0.02)
------------ -------- ------------
Total distributions...................................... (0.03) 0.00 (0.02)
------------ -------- ------------
Net asset value, end of period............................... $ 11.44 $ 12.41 $ 11.36
------------ -------- ------------
------------ -------- ------------
Total investment return (c).................................. (7.58)% 8.57%(b) (8.05)%
Ratios and supplemental data:
Net assets, end of period (in 000's)......................... $ 12,598 $ 14,797 $ 13,978
Ratio of net investment income (loss) to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 0.41% 2.63%(a) (0.09)%
Without expense reductions and reimbursement from LGT Asset
Management................................................ (0.69)% 0.65%(a) (1.19)%
Ratio of expenses to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 2.37% 2.40%(a) 2.87%
Without expense reductions and reimbursement from LGT Asset
Management................................................ 3.47% 4.38%(a) 3.97%
<CAPTION>
ADVISOR CLASS+
------------------
MAY 31, 1994 JUNE 1, 1995
COMMENCEMENT OF TO
OPERATIONS) TO OCTOBER 31,
OCTOBER 31, 1994 1995
-------------------- ------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................... $ 11.43 $ 11.45
-------- --------
Income from investment operations:
Net investment income (loss)............................... 0.03* 0.11*
Net realized and unrealized gain (loss) on investments..... 0.92 (0.09)
-------- --------
Net increase (decrease) from investment operations....... 0.95 0.02
-------- --------
Distributions to shareholders:
From net investment income................................. 0.00 0.00
-------- --------
Total distributions...................................... 0.00 0.00
-------- --------
Net asset value, end of period............................... $ 12.38 $ 11.47
-------- --------
-------- --------
Total investment return (c).................................. 8.31%(b) 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)......................... $ 13,404 $95
Ratio of net investment income (loss) to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 2.13%(a) 0.91%(a)
Without expense reductions and reimbursement from LGT Asset
Management................................................ 0.15%(a) (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and reimbursement from LGT Asset
Management................................................ 2.90%(a) 1.87%(a)
Without expense reductions and reimbursement from LGT Asset
Management................................................ 4.88%(a) 2.97%(a)
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by LGT Asset Management, the net investment income per
share would have been reduced by $0.14, $0.13 and $0.12 for Class A, Class
B, and Advisor Class, respectively, for the period ended October 31, 1995,
and $0.04 and $0.04 for Class A and Class B, respectively from May 31, 1994
to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Prospectus Page 13
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
------------------- ------------------- -------------------
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF (COMMENCEMENT OF JUNE 1, 1995
OPERATIONS) TO OPERATIONS) TO TO
OCTOBER 31, 1995* OCTOBER 31, 1995* OCTOBER 31, 1995*
------------------- ------------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................... $ 11.43 $ 11.43 $ 11.84
---------- ---------- ----------
Income from investment operations:
Net investment income........... 0.02** (0.04)** 0.04**
Net realized and unrealized gain
on investments................. 3.14 3.14 2.76
---------- ---------- ----------
Net increase from investment
operations..................... 3.16 3.10 2.80
---------- ---------- ----------
Net asset value, end of period.... $ 14.59 $ 14.53 $ 14.64
---------- ---------- ----------
---------- ---------- ----------
Total investment return (c)....... 27.65%(b) 27.12%(b) 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)........................... $ 4,082 $ 2,959 $ 164
Ratio of net investment income
(loss) to average net assets:
With expense reductions and
reimbursement by LGT Asset
Management..................... 0.20%(a) (0.30)%(a) 0.70%(a)
Without expense reductions and
reimbursement by LGT Asset
Management..................... (11.11)%(a) (11.61)%(a) (10.61)%(a)
Ratio of expenses to average net
assets:
With expense reductions and
reimbursement by LGT Asset
Management..................... 2.32%(a) 2.82%(a) 1.82%(a)
Without expense reductions and
reimbursement by LGT Asset
Management..................... 13.63%(a) 14.13%(a) 13.13%(a)
</TABLE>
- --------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Before reimbursement by LGT Asset Management, net investment income per
share would have been reduced by $1.12, $1.04 and $0.61, for Class A, Class
B, and Advisor Class, respectively.
Prospectus Page 14
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
FINANCIAL SERVICES FUND
The Financial Services Fund's investment objective is long-term capital growth.
The Financial Services Fund seeks its objective by investing all of its
investable assets in the Financial Services Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that operate in
the financial services industries. The Financial Services Portfolio's investment
objective is identical to that of the Financial Services Fund. The Financial
Services Portfolio invests in financial services companies which, in the opinion
of LGT Asset Management, have potential for above average, long-term growth in
sales and earnings. There is no assurance that the Financial Services Fund or
the Financial Services Portfolio will achieve its investment objective.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by financial services companies. A "financial services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from financial services activities, or (ii) at least 50% of the assets was
devoted to such activities, based on the company's most recent fiscal year. The
remainder of the Financial Services Portfolio's assets may be invested in debt
securities issued by financial services companies and/or equity and debt
securities of companies outside of the financial services industries, which, in
the opinion of LGT Asset Management, stand to benefit from developments in the
financial services industries.
In analyzing companies for possible investment by the Financial Services
Portfolio, LGT Asset Management ordinarily looks for several of the following
characteristics: above-average per share earnings growth; high return on
invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong competitive advantages;
efficient service; pricing flexibility; strong management; and general operating
characteristics which will enable the companies to compete successfully in their
respective markets.
GLOBAL FINANCIAL SERVICES INDUSTRIES INVESTMENT. Examples of financial services
companies include those providing financial services to consumers and industry
including the following and their foreign equivalents: commercial banks and
savings institutions and loan associations and their holding companies; consumer
and industrial finance companies; diversified financial services companies;
investment banks; insurance brokerages; securities brokerage and investment
advisory companies; real estate-related companies; leasing companies; and a
variety of firms in all segments of the insurance field such as multi-line,
property and casualty and life insurance and insurance holding companies.
LGT Asset Management believes an accelerating rate of global economic
interdependence will lead to significant growth in the demand for financial
services. In addition, in LGT Asset Management's view, as the industries evolve,
opportunities will emerge for those companies positioned for the future. Thus,
LGT Asset Management expects that banking and related financial institution
consolidation in the developed countries, increased demand for retail borrowing
in developing countries, a growing need for international trade-based financing,
a rising demand for sophisticated risk management, the proliferating number of
liquid securities markets around the world, and larger concentrations of
investable assets should lead to growth in financial service companies that are
positioned for the future.
INFRASTRUCTURE FUND
The Infrastructure Fund's investment objective is long-term capital growth. The
Infrastructure Fund seeks its objective by investing all of its investable
assets in the Infrastructure Portfolio, that, in turn, invests primarily in
equity securities of companies throughout the world that design, develop or
provide products and services significant to a country's infrastructure. The
Infrastructure Portfolio's investment objective is identical to that of the
Infrastructure Fund. The Infrastructure Portfolio invests in infrastructure
companies which, in the opinion of LGT Asset Management, have potential for
above average, long-term growth in sales and earnings. There is no assurance
that the Infrastructure Fund or the Infrastructure Portfolio will achieve its
investment objective.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common and
Prospectus Page 15
<PAGE>
GT GLOBAL THEME FUNDS
preferred stocks and warrants to acquire such securities issued by
infrastructure companies. An "infrastructure" company is an entity in which (i)
at least 50% of either the revenues or earnings was derived from infrastructure
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the
Infrastructure Portfolio's assets may be invested in debt securities issued by
infrastructure companies and/or equity and debt securities of companies outside
of the infrastructure industries, which, in the opinion of LGT Asset Management,
stand to benefit from developments in the infrastructure industries.
In analyzing companies for possible investment by the Infrastructure Portfolio,
LGT Asset Management ordinarily looks for several of the following
characteristics: above-average per share earnings growth; high return on
invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong competitive advantages;
effective research and product development and marketing; development of new
technologies; efficient service; pricing flexibility; strong management; and
general operating characteristics that will enable the companies to compete
successfully in their respective markets.
GLOBAL INFRASTRUCTURE INDUSTRIES INVESTMENT. Examples of infrastructure
companies include those engaged in designing, developing or providing the
following products and services: electricity production; oil, gas, and coal
exploration, development, production and distribution; water supply, including
water treatment facilities; nuclear power and other alternative energy sources;
transportation, including the construction or operation of transportation
systems; steel, concrete, or similar types of products; communications equipment
and services (including equipment and services for both data and voice
transmission); mobile communications and cellular radio/paging; emerging
technologies combining telephone, television and/or computer systems; and other
products and services, which, in LGT Asset Management's judgment, constitute
services significant to the development of a country's infrastructure.
LGT Asset Management believes that a country's infrastructure is one key to the
long-term success of that country's economy. LGT Asset Management believes that
adequate energy, transportation, water, and communications systems are essential
elements for long-term economic growth. LGT Asset Management believes that many
developing nations, especially in Asia and Latin America, plan to make
significant expenditures to the development of their infrastructure in the
coming years, which is expected to facilitate increased levels of services and
manufactured goods.
In the developed countries of North America, Europe, Japan and the south
Pacific, LGT Asset Management expects that the replacement and upgrade of
transportation and communications systems should stimulate growth in the
infrastructure industries of those countries. In addition, in LGT Asset
Management's view, deregulation of telecommunications and electric and gas
utilities in many countries is promoting significant changes in these
industries.
LGT Asset Management believes that strong economic growth in developing
countries and infrastructure replacement, upgrade, and deregulation in more
developed countries provide an environment for favorable investment
opportunities in infrastructure companies worldwide. In addition, the long-term
growth rates of certain foreign countries' economies may be substantially higher
than the long-term growth rate of the U.S. economy. An integral aspect of
certain foreign countries' economies may be the development or improvement of
their infrastructure.
NATURAL RESOURCES FUND
The Natural Resources Fund's investment objective is long-term capital growth.
The Natural Resources Fund seeks its objective by investing all of its
investable assets in the Natural Resources Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that own,
explore or develop natural resources and other basic commodities, or supply
goods and services to such companies. The Natural Resources Portfolio's
investment objective is identical to that of the Natural Resources Fund. The
Natural Resources Portfolio invests in natural resource companies which, in the
opinion of LGT Asset Management, have potential for above average, long-term
growth in sales and earnings. There is no assurance that the Natural Resources
Fund or the Natural Resources Portfolio will achieve its investment objective.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the
Prospectus Page 16
<PAGE>
GT GLOBAL THEME FUNDS
Natural Resources Portfolio's assets may be invested in debt securities issued
by natural resource companies and/or equity and debt securities of companies
outside of the natural resource industries, which, in the opinion of LGT Asset
Management, stand to benefit from developments in the natural resource
industries.
The Natural Resources Portfolio may invest in securities of companies in natural
resource industries and commodity groups which, in LGT Asset Management's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Portfolio, LGT Asset
Management ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; development of new
technologies; efficient service; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets.
GLOBAL NATURAL RESOURCE INDUSTRIES INVESTMENT. Examples of natural resource
companies include those which own, explore or develop: energy sources (such as
oil, gas and coal); ferrous and non-ferrous metals (such as iron, aluminum,
copper, nickel, zinc and lead), strategic metals (such as uranium and titanium)
and precious metals (such as gold, silver and platinum); chemicals; forest
products (such as timber, coated and uncoated tree sheet, pulp and newsprint);
other basic commodities (such as foodstuffs); refined products (such as
chemicals and steel) and service companies that sell to these producers and
refiners; and other products and services, which, in LGT Asset Management's
opinion are significant to the ownership and development of natural resources
and other basic commodities.
LGT Asset Management will allocate the Natural Resources Portfolio's investments
among natural resource companies depending on its assessment of their long-term
growth potential. In assessing these companies' long-term growth potential, LGT
Asset Management will evaluate, among other factors, their capabilities for
expanded exploration and production, superior exploration programs and
production techniques and facilities, current inventories, expected production
and demand levels and the potential to accumulate new resources.
LGT Asset Management believes that the liberalization of formerly socialist
economies will bring about dramatic changes in both the supply and demand for
natural resources. In addition, rapid industrialization in developing countries
of Asia and Latin America is generating new demands for industrial materials
that are affecting world commodities markets. LGT Asset Management believes
these changes are likely to create investment opportunities that benefit from
new sources of supply and/or from changes in commodities prices.
LGT Asset Management believes that investments in natural resource industries
offer an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. LGT Asset Management believes that rising commodity prices
and increasing worldwide industrial production may favorably affect share prices
of natural resource companies, and investments in such companies can offer
excellent opportunities to offset the effects of inflation.
CONSUMER PRODUCTS AND SERVICES FUND
The Consumer Products and Services Fund's investment objective is long-term
capital growth. The Consumer Products and Services Fund seeks its objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, invests primarily in equity securities of companies
throughout the world that manufacture, market, retail or distribute consumer
products and services. The Consumer Products and Services Portfolio's investment
objective is identical to that of the Consumer Products and Services Fund. The
Consumer Products and Services Portfolio invests in consumer products and
services companies which, in the opinion of LGT Asset Management, have potential
for above average, long-term growth in sales and earnings. There is no assurance
that the Consumer Products and Services Fund or the Consumer Products and
Services Portfolio will achieve its investment objective.
At least 65% of the Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. A "consumer
products or services" company is an entity in which (i) at least 50% of either
the revenues or earnings was derived from activities relating to consumer
products or services, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. The remainder of the
Consumer Products and Services Portfolio's assets may be
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invested in debt securities issued by consumer products or services companies
and/or equity and debt securities of companies outside the consumer products or
services industries, which, in the opinion of LGT Asset Management, stand to
benefit from developments in such industries.
In analyzing companies for possible investment by the Consumer Products and
Services Portfolio, LGT Asset Management ordinarily looks for several of the
following characteristics: above-average per share earnings growth; high return
on invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong management; strong and growing
market share; pricing flexibility; effective product development and marketing;
excellent products and services; superior perceived value; and general operating
characteristics which will enable the companies to compete successfully in their
respective markets.
GLOBAL CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. Examples of
consumer products and services companies include those that manufacture, market,
retail, or distribute: (i) durable goods, such as homes, household goods,
automobiles, boats, furniture and appliances, and computers; (ii) non-durable
goods, such as food and beverages and apparel; (iii) media, entertainment,
broadcasting, publishing and sports-related goods and services, such as
television and radio broadcast, motion pictures, wireless communications, gaming
casinos, theme parks, restaurants and lodging; and (iv) goods and services to
companies in the foregoing industries such as advertisers, textile companies and
distribution and shipping companies.
The Consumer Products and Services Portfolio expects that a significant portion
of its assets may be invested in the securities of U.S. issuers from time to
time, particularly those that market their products globally. However, consumer
products and services companies of a particular nation or region of the world
are often operated and owned in their local markets, close to their customers.
These companies, LGT Asset Management believes, may offer superior opportunities
for capital growth as compared to their larger, multinational counterparts.
Certain global markets may be more attractive than others from time to time;
companies dependent on U.S. markets, for example, may be outperformed by
companies not dependent on U.S. markets.
LGT Asset Management also believes that the demand for consumer products and
services worldwide will increase along with rising disposable incomes in both
developed and developing nations. Emerging economies, such as those in China,
Southeast Asia, the former Eastern Europe and Latin America, offer opportunities
for the growth and expansion of consumer markets. These regions currently
comprise a growing source of inexpensive manufacture of consumer products for
export and a growing source of demand for consumer products and services as the
disposable incomes of their populations increase. In LGT Asset Management's
view, these changes are likely to create investment opportunities in companies,
both local and multinational, that are able to employ innovative manufacturing,
marketing, retailing and distribution methods to open new markets and/or expand
existing markets.
HEALTH CARE FUND
The Health Care Fund's investment objective is long-term capital appreciation.
The Health Care Fund seeks its objective by investing primarily in equity
securities of health care companies throughout the world. The Health Care Fund
invests in health care companies, which, in the opinion of LGT Asset Management,
have potential for above average, long-term growth in sales and earnings. There
is no assurance that the Health Care Fund will achieve its objective.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks, and warrants to acquire such securities, issued by
health care companies. A "health care" company is an entity in which (i) at
least 50% of either the revenues or earnings was derived from health care
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Health Care
Fund's assets may be invested in debt securities issued by health care companies
and/or equity and debt securities of companies outside of the health care
industry, which, in the opinion of LGT Asset Management, stand to benefit from
developments in the health care industries.
In analyzing companies for possible investment by the Health Care Fund, LGT
Asset Management ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strong management; and general operating characteristics which will enable the
companies to compete successfully in their respective markets.
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GLOBAL HEALTH CARE INDUSTRIES INVESTMENT. Examples of health care companies
include those that are substantially engaged in the design, manufacture or sale
of products or services used for or in connection with health care or medicine.
Such firms may include pharmaceutical companies; firms that design, manufacture,
sell or supply medical, dental and optical products, hardware or services;
companies involved in biotechnology, medical diagnostic, and biochemical
research and development; and companies involved in the ownership and/or
operation of health care facilities.
The Health Care Fund expects that, from time to time, a significant portion of
its assets may be invested in the securities of U.S. issuers. Health care
industries, however, are global industries with significant, growing markets
outside of the United States. A sizeable portion of the companies which comprise
the health care industries are headquartered outside of the United States, and
many important pharmaceutical and biotechnology discoveries and technological
breakthroughs have occurred outside of the United States, primarily in Japan,
the United Kingdom and Western Europe.
LGT Asset Management believes that the global health care industries offer
attractive long-term supply/demand dynamics. While the U.S., Western Europe, and
Japan presently account for over 90% of health care expenditures, this should
change dramatically in the coming decade if the populations of developing
countries devote an increasing percentage of income to health care.
Additionally, LGT Asset Management believes demographics on aging point to a
significant increase in demand from the industrialized nations, as the elderly
account for a growing proportion of worldwide health care spending. Finally, in
LGT Asset Management's view, technology will continue to expand the range of
products and services offered, with new drugs, medical devices and surgical
procedures addressing medical conditions previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. LGT Asset Management believes that this transition offers investment
opportunities in those companies acting as consolidators or otherwise gaining
market share at the expense of less efficient competitors.
TELECOMMUNICATIONS FUND
The Telecommunications Fund's investment objective is long-term growth of
capital. The Telecommunications Fund seeks its objective by investing primarily
in equity securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
The Telecommunications Fund invests in telecommunications companies which, in
the opinion of LGT Asset Management, have potential for above average, long-term
growth in sales and earnings on a sustained basis. There is no assurance that
the Telecommunications Fund will achieve its objective.
At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or equity
and debt securities of companies outside of the telecommunications industry
which, in the opinion of LGT Asset Management, stand to benefit from
developments in the telecommunications industry.
In analyzing companies for possible investment by the Telecommunications Fund,
LGT Asset Management ordinarily looks for several of the following
characteristics: above-average per share earnings growth; high return on
invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong competitive advantages;
effective research and product development and marketing; development of new
technologies; efficient service; pricing flexibility; strong management; and
general operating characteristics that will enable the companies to compete
successfully in their respective markets.
GLOBAL TELECOMMUNICATIONS INDUSTRIES INVESTMENT. The telecommunications industry
is composed of a variety of sectors, ranging from companies concentrating on
established technologies to those primarily engaged in emerging or developing
technologies. The characteristics of companies focusing on the same technology
will vary among countries depending upon the extent to which the technology is
established in the particular country. LGT Asset Management will allocate the
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Fund's investments among these sectors depending upon its assessment of their
relative long-term growth potentials.
For purposes of the Telecommunications Fund's policy of investing at least 65%
of its total assets in the securities of telecommunications companies, the
companies in which the Fund will invest are those engaged primarily in
designing, developing or providing the following products and services:
communications equipment and services (including equipment and services for both
data and voice transmission); electronic components and equipment; broadcasting
(including television and radio, satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
LGT Asset Management believes that there are opportunities for continued growth
in demand for components, products, media and systems to collect, store,
retrieve, transmit, process, distribute, record, reproduce and use information.
The pervasive societal impact of communications and information technologies has
been accelerated by the lower costs and higher efficiencies that result from the
blending of computers with telecommunications systems. Accordingly, companies
engaged in the production of methods for using electronic and, potentially,
video technology to communicate information are expected to be important in the
Telecommunications Fund's portfolio. Older technologies, such as photography and
print also may be represented, however.
GLOBAL INVESTMENTS. Each Theme Portfolio expects that, from time to time, a
significant portion of its assets may be invested in the securities of domestic
issuers. Each industry represented in the Theme Portfolios, however, is a global
industry with significant, growing markets outside of the United States. A
sizeable proportion of the companies which comprise such industries are
headquartered outside of the United States.
For these reasons, LGT Asset Management believes that a portfolio composed only
of securities of U.S. issuers does not provide the greatest potential for return
from a Theme Portfolio investment. LGT Asset Management uses its financial
expertise in markets located throughout the world and the substantial global
resources of Liechtenstein Global Trust in attempting to identify those
countries and companies then providing the greatest potential for long-term
capital appreciation. In this fashion, LGT Asset Management seeks to enable
shareholders to capitalize on the substantial investment opportunities and the
potential for long-term growth of capital presented by the global industries
represented in the Theme Portfolios.
LGT Asset Management allocates each Theme Portfolio's assets among securities of
countries and in currency denominations where opportunities for meeting each
Theme Portfolio's investment objective are expected to be the most attractive.
Each Theme Portfolio may invest substantially in securities denominated in one
or more currencies. Under normal conditions, each Theme Portfolio invests in the
securities of issuers located in at least three countries, including the United
States; investments in securities of issuers in any one country, other than the
United States, will represent no more than 40% of the Financial Services
Portfolio's and the Telecommunication Fund's total assets, and no more than 50%
of the Infrastructure Portfolio's, the Natural Resources Portfolio's, the Health
Care Fund's and the Consumer Products and Services Portfolio's total assets.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). LGT Asset Management believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Theme Portfolios in privatizations in
appropriate circumstances. In certain foreign countries, the ability of foreign
entities such as the Theme Portfolios to participate in privatizations may be
limited by local law, or the terms on which the Theme Portfolios may be
permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
TEMPORARY DEFENSIVE STRATEGIES. Each Theme Portfolio retains the flexibility to
respond promptly to changes in market and economic conditions. Accordingly, in
the interest of preserving shareholders' capital and consistent with each Theme
Portfolio's investment objective, LGT Asset Management may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted
due to market, economic or political conditions. Under a defensive strategy,
each Theme Portfolio may invest up to 100% of its total assets in cash (U.S.
dollars, foreign currencies or multinational currency units) and/or high quality
debt securities or money market instruments
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issued by corporations, the U.S. or a foreign government. In addition, for
temporary defensive purposes, such as during times of international political or
economic uncertainty, most or all of each Theme Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent any
Theme Portfolio adopts a temporary defensive posture, it will not be invested so
as to achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of the Funds' shares
or to meet its ordinary daily cash needs, each Theme Portfolio may hold cash
(U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. Money
market instruments in which each Theme Portfolio may invest include, but are not
limited to, U.S. or foreign government securities; high-grade commercial paper;
bank certificates of deposit; bankers' acceptances; and repurchase agreements
related to any of the foregoing. High-grade commercial paper refers to
commercial paper rated A-1 by S&P or P-1 by Moody's or, if not rated, determined
by LGT Asset Management to be of comparable quality.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each Theme Portfolio may invest up to
10% of its total assets in other investment companies. As a shareholder in an
investment company, that Theme Portfolio would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Theme Portfolio would continue to pay its own management
fees and other expenses.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. From time to
time, it may be advantageous for a Theme Portfolio to borrow money rather than
sell existing portfolio positions to meet redemption requests. Accordingly, a
Theme Portfolio may borrow from banks or may borrow through reverse repurchase
agreements and "roll" transactions in connection with meeting requests for the
redemptions of a Theme Portfolio's shares.
A reverse repurchase agreement is a borrowing transaction in which a Theme
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves a Theme Portfolio's sale of securities together
with its commitment (for which that Theme Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date.
Any Theme Portfolio's borrowings will not exceed 33 1/3% of that Theme
Portfolio's total assets, i.e., that Theme Portfolio's total assets at all times
will equal at least 300% of the amount of outstanding borrowings. If market
fluctuations in the value of the Theme Portfolio's securities holdings or other
factors cause the ratio of the Theme Portfolio's total assets to outstanding
borrowings to fall below 300%, within three days (excluding Sundays and
holidays) of such event the Theme Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. A Theme Portfolio also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by a Theme Portfolio may cause greater
fluctuation in the value of its shares than would be the case if a Theme
Portfolio did not borrow. If a Theme Portfolio's borrowings exceed 5% of its
total assets, no additional investments will be made.
SECURITIES LENDING. Each Theme Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. The borrower must maintain
with the Theme Portfolio's custodian collateral consisting of cash, U.S.
government securities or other liquid, high-grade debt securities equal to at
least the value of the borrowed securities, plus any accrued interest. The Theme
Portfolios will receive any interest paid on the loaned securities and a fee
and/or a portion of the interest earned on the collateral. Income received in
connection with securities lending may be used to offset each Theme Portfolio's
custody fees. Each Theme Portfolio limits its loans of portfolio securities to
an aggregate of 30% of the value of its total assets, measured at the time any
such loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Theme Portfolios may purchase
debt securities on a "when-issued" basis and may purchase or sell such
securities on a "forward commitment" basis in order to hedge against anticipated
changes in interest rates and prices. The price, which is generally expressed in
yield terms, is fixed at the time the commitment is made, but delivery and
payment for the securities take place at a later date. When-issued securities
and forward commitments may be sold prior to the settlement date, but a Theme
Portfolio will purchase or sell when-issued
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GT GLOBAL THEME FUNDS
securities or enter into forward commitments only with the intention of actually
receiving or delivering the securities, as the case may be. No income accrues on
securities which have been purchased pursuant to a forward commitment or on a
when-issued basis prior to delivery to the Theme Portfolio. If the Theme
Portfolio disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time a Theme Portfolio enters
into a transaction on a when-issued or forward commitment basis, a segregated
account consisting of cash or high grade liquid debt securities equal to the
value of the when-issued or forward commitment securities will be established
and maintained with its custodian and will be marked to market daily. There is a
risk that the securities may not be delivered and that the Theme Portfolio may
incur a loss.
OTHER POLICIES. The Financial Services Portfolio, Infrastructure Portfolio,
Natural Resources Portfolio, Consumer Products and Services Portfolio and
Telecommunications Fund each may invest up to 15% of its net assets, and the
Health Care Fund up to 10% of its total assets, in securities for which no
readily available market exists, so-called "Illiquid Securities." LGT Asset
Management believes that carefully selected investments in joint ventures,
cooperatives, partnerships and state enterprises which are illiquid
(collectively, "Special Situations") could enable the Portfolio to achieve
capital appreciation substantially exceeding the appreciation the Portfolio
would realize if it did not make such investments. However, in order to attempt
to limit investment risk, each of the Theme Portfolios will invest no more than
5% of its total assets in Special Situations.
The Financial Services Portfolio, Health Care Fund and Telecommunications Fund
each currently will not invest more than 5%, and the Infrastructure Portfolio,
the Natural Resources Portfolio and the Consumer Products and Services Portfolio
not more than 20%, of its total assets in debt securities rated below investment
grade, that is, rated below one of the four highest rating categories by
Standard & Poor's Ratings Services ("S&P") or Moody's Investors Service, Inc.
("Moody's") or deemed to be of equivalent quality in the judgment of LGT Asset
Management. See "Risk Factors -- Risks Associated with Debt Securities." Debt
securities rated below investment grade are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." Such securities may include (i)
corporate debt securities and (ii) debt instruments issued by governments whose
debt is not rated, and are subject to a greater risk of loss of principal and
interest than those of securities rated BBB or above by S&P or Baa or above by
Moody's. The Theme Portfolios may also use instruments (including forward
contracts) often referred to as "derivatives." See "Options, Futures and Forward
Currency Transactions."
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RISK FACTORS
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THEME PORTFOLIOS -- GENERAL
Because of the focus of each Theme Portfolio on its industries, an investment in
each may be more volatile than that of other investment companies that do not
concentrate their investments in such a manner. Moreover, the value of the
shares of each Fund will be especially susceptible to factors affecting the
industries in which it focuses. No Fund should be considered as a complete
investment program.
FINANCIAL SERVICES FUND AND FINANCIAL SERVICES PORTFOLIO
The value of Financial Services Fund shares may be susceptible to factors
affecting the financial services industries. Financial services industries may
be subject to greater governmental regulation than many other industries and
changes in governmental policies and the need for regulatory approvals may have
a material effect on the services of this industry. Banks, savings institutions
and loan associations, and finance companies are subject to extensive
governmental regulation which may limit both the financial commitments they can
make, including the amounts and types of loans, and the interest rates and fees
they can charge. These companies are subject to rapid business changes,
significant competition, value fluctuations due to the concentration of loans in
particular industries significantly affected by economic conditions (such as
real estate or energy) and volatile performance dependent upon the availability
and cost of capital and prevailing interest rates. In addition, general economic
conditions significantly affect these companies. Credit and other losses
resulting from the financial difficulty of borrowers or other third parties
potentially may have an adverse effect on companies in these industries.
Moreover, neither federal insurance of deposits nor governmental regulation
ensures the solvency or profitability of commercial banks or thrifts or their
holding companies, or insures against any risk of investment in the securities
issued by such institutions.
Similar considerations affect financial services industries in foreign
countries. In particular, government regulation in certain foreign countries may
include interest rate controls, credit controls and price controls. Moreover, in
some cases foreign governments have taken steps to nationalize the operations of
certain companies, such as banks, in the financial services sector.
The laws generally separating commercial and investment banking, as well as laws
governing the capitalization and regulation of these industries, currently are
being studied by U.S. governmental authorities. The services offered by banks
may expand if legislation broadening bank powers is enacted. While providing
diversification, expanded powers could expose banks to well-established
competitors, particularly as the historical distinctions between banks and other
financial institutions erode. Increased competition may result from the
broadening of regional and national interstate powers, which has led to a
decline in the number of publicly traded regional banks, and from the aggressive
expansion of larger, publicly held foreign banks. Foreign banks, particularly
those of Japan, have reported financial difficulties attributed to increased
competition, regulatory changes, and general economic difficulties.
The financial services area in the United States currently is changing
relatively rapidly as existing distinctions between various financial service
segments become less clear. For instance, recent business combinations have
included insurance, finance, and securities brokerage under single ownership.
Some primarily retail corporations have expanded into securities and insurance
fields. Investment banking, securities brokerage and investment advisory
companies in particular are subject to government regulation and risk due to
securities trading and underwriting activities.
Many of the investment considerations discussed in connection with banks,
savings institutions and loan associations, and finance companies also apply to
insurance companies. The performance of insurance company investments will be
subject to risk from several factors. The earnings of insurance companies will
be affected by interest rates, pricing (including severe pricing competition,
from time to time), claims activity, marketing competition and general economic
conditions. Particular insurance lines also will be influenced by specific
matters. Property and casualty insurer profits may be affected by certain
weather catastrophes and other disasters. Life and health insurer profits may be
affected by mortality and morbidity rates.
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Individual companies may be exposed to material risks, including reserve
inadequacy, problems in investment portfolios (due to real estate or "junk" bond
holdings, for example), and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation, including
the imposition of maximum rate levels, which may not be adequate for some lines
of business. Proposed or potential anti-trust or tax law changes also may affect
adversely insurance companies' policy sales, tax obligations and profitability.
In addition, significant insurance companies have reported liquidity or solvency
difficulties, or have experienced credit rating downgrades.
INFRASTRUCTURE FUND AND INFRASTRUCTURE PORTFOLIO
In the United States and foreign countries, infrastructure industries may be
subject to greater political, environmental and other governmental regulation
than many other industries. The nature of such regulation continues to evolve in
both the United States and foreign countries, and changes in governmental
policies and the need for regulatory approvals may have a material effect on the
products and services of this industry. Electric, gas, water and most
telecommunications companies in the United States, for example, are subject to
both federal and state regulation affecting permitted rates of return and the
kinds of services that may be offered. Changes in prevailing interest rates may
also affect the Infrastructure Fund's share values because prices of equity and
debt securities of infrastructure companies often tend to increase when interest
rates decline and decrease when interest rates rise.
In addition, many infrastructure companies, including coal, steel, and other
types of companies, have historically been subject to the risks attendant to
increases in fuel and other operating costs, high interest costs on borrowed
funds, costs associated with compliance with environmental and other safety
regulations and changes in the regulatory climate. Such governmental regulation
may also hamper the development of new technologies, and it is impossible to
predict the direction, type or effect of any future regulation. Further,
competition is intense for many infrastructure companies. As a result, many of
these companies may be adversely affected in the future and such companies may
be subject to increased share price volatility. In addition, many companies have
diversified into oil and gas exploration and development, and therefore returns
may be more sensitive to energy prices. Other infrastructure companies, such as
water supply companies, are in a highly fragmented industry due to local
ownership. Generally these companies are mature and are experiencing little or
no growth.
NATURAL RESOURCES FUND AND NATURAL RESOURCES PORTFOLIO
In the United States and foreign countries, natural resource industries may be
subject to greater political, environmental and other governmental regulation
than many other industries. The nature of such regulation continues to evolve in
both the United States and foreign countries, and changes in governmental
policies and the need for regulatory approvals may have a material effect on the
products and services of natural resource companies. For example, the
exploration, development and distribution of coal, oil and gas in the United
States are subject to significant federal and state regulation, which may affect
rates of return on such investments and the kinds of services that may be
offered.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations and changes in the regulatory climate. Such governmental regulations
may also hamper the development of new technologies, and it is impossible to
predict the direction, type or effect of any future regulation.
Further, competition is intense for many natural resource companies. As a
result, many of these companies may be adversely affected in the future and the
value of the securities issued by such companies may be subject to increased
share price volatility.
The value of the Natural Resources Portfolio's securities will fluctuate in
response to stock market developments, as well as market conditions for the
particular natural resources with which the issuer is involved. The price of the
commodity will fluctuate due to changes in worldwide levels of inventory, and
changes, perceived or actual, in production and consumption. The values of
natural resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics. The Natural Resources
Portfolio's investments in precious metals are subject to many risks, including
substantial price fluctuations over short periods of time. Further, the Natural
Resources Portfolio's investments in companies are expected to be subject to
irregular fluctuations in earnings, because these companies are affected by
changes in the availability of money, the level of interest rates, and other
factors.
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CONSUMER PRODUCTS AND SERVICES FUND AND CONSUMER PRODUCTS AND SERVICES PORTFOLIO
General economic conditions significantly affect consumer products and services
companies. The performance of consumer products manufacturers, marketers,
retailers and distributors relates closely to the performance of the overall
economy, interest rates and consumer confidence. Such performance also depends
substantially on disposable household income and consumer spending, both of
which are closely tied to the actual or perceived performance of the overall
economy. In addition, changes in demographics and consumer tastes may also
affect the demand for, and success of, consumer products and services in the
global marketplace.
Further, competition is keen for many consumer products and services companies.
As a result, many consumer products and services companies may be adversely
affected and the value of the securities issued by such companies may be subject
to increased share price volatility. In addition, many consumer products and
services companies have unpredictable earnings, due in part to changes in
consumer tastes and intense competition. Also, the consumer products and
services industries have reacted strongly to technology development and to the
threat of government regulation. The consumer products and services may also be
subject to greater government regulation, including trade regulation, than many
other industries. Changes in governmental policy and the need for regulatory
approvals may have a material effect on the products and services of the
consumer products and services industries. Such governmental regulations may
also hamper the development of new business opportunities, and it is impossible
to predict the direction, type or effect of any future government regulation.
HEALTH CARE FUND
Health care industries generally is subject to substantial government regulation
and approval of its products and services; accordingly, changes in government
policies or regulation could have a material effect on the demand for products
and services offered by health care companies and therefore could affect the
performance of the Health Care Fund. In addition, the products and services
offered by such companies may be subject to rapid obsolescence caused by
technological and scientific advances. Moreover, although the Health Care Fund's
portfolio will consist of securities of a substantial number of issuers, the
Health Care Fund's status as a "non-diversified" investment company pursuant to
the 1940 Act means that, with respect to 50% of the Health Care Fund's total
assets, more than 5% may be invested in the securities of a single issuer.
Because the Health Care Fund concentrates in health care companies and is
non-diversified, the value of the Health Care Fund's shares may fluctuate more
widely, and the Health Care Fund may present greater risks than funds investing
in a greater number of industries or issuers.
TELECOMMUNICATIONS FUND
Telecommunications industries may be subject to greater governmental regulation
than many other industries and changes in governmental policies and the need for
regulatory approvals may have a material effect on the products and services of
this industry. Telephone operating companies in the United States, for example,
are subject to both federal and state regulation affecting permitted rates of
return and the kinds of services that may be offered. Certain types of companies
represented in the Fund are engaged in fierce competition for market share. In
recent years, these have been companies providing goods and services such as
private and local area networks and telephone set equipment.
FOREIGN INVESTING. Foreign investing entails certain risks. The securities of
non-U.S. issuers generally will not be registered with, nor the issuers thereof
be subject to, the reporting requirements of the SEC. Accordingly, there may be
less publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
In addition, certain costs attributable to foreign investing, such as custody
charges, are higher than those attributable to domestic investing. Securities of
some foreign companies are less liquid and their prices may be more volatile
than securities of comparable domestic companies. The Theme Portfolios' interest
and dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Theme Portfolios' net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Theme Portfolios, political or social instability, or
diplomatic developments which could affect the Theme Portfolios' investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation,
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GT GLOBAL THEME FUNDS
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Each Theme Portfolio may invest in issuers domiciled in "emerging markets,"
I.E., those countries determined by LGT Asset Management to have developing or
emerging economies and markets. Emerging market investing involves risks in
addition to those risks involved in foreign investing.
For example, many emerging market countries have experienced substantial, and in
some periods extremely high, rates of inflation for many years. In addition,
economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and continue to be affected adversely by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. In addition, brokerage
commissions, custodial services and other costs relating to investment in
foreign markets generally are more expensive than in the United States,
particularly with respect to emerging markets.
Since the Theme Portfolios may invest substantially in securities denominated in
currencies other than the U.S. dollar, and since the Theme Portfolios may hold
foreign currencies, the Theme Portfolios will be affected favorably or
unfavorably by exchange control regulations or changes in the exchange rates
between such currencies and the U.S. dollar. Changes in currency exchange rates
will influence the value of the Funds' shares, and also may affect the value of
dividends and interest earned by the Theme Portfolios and gains and losses
realized by the Theme Portfolios. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
each Theme Portfolio generally will vary conversely with market interest rates.
If interest rates in a market fall, the value of the debt securities held by
each Theme Portfolio ordinarily will rise. If market interest rates increase,
however, the debt securities owned by each Theme Portfolio in that market will
be likely to decrease in value.
As discussed above, the Infrastructure Portfolio, Natural Resources Portfolio
and Consumer Products and Services Portfolio may each invest up to 20% of its
total assets in debt securities rated below investment grade. Such investments
involve a high degree of risk. However, the Infrastructure Portfolio, Natural
Resources Portfolio and Consumer Products and Services Portfolio will not invest
in debt securities that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. For S&P, BB indicates the lowest
degree of speculation for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest, and such issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing. Lower quality debt securities are also generally considered to be
subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic conditions. These lower quality debt
securities are the equivalent of high yield, high risk bonds, commonly known as
"junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
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GT GLOBAL THEME FUNDS
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Theme Portfolios. If an issuer exercises these provisions in a
declining interest rate market, the Theme Portfolios may have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. In addition, the Theme Portfolios may have difficulty disposing of
lower quality securities because they may have a thin trading market. There may
be no established retail secondary market for many of these securities, and each
of the Theme Portfolios anticipates that such securities could be sold only to a
limited number of dealers or institutional investors. The lack of a liquid
secondary market also may have an adverse impact on market prices of such
instruments and may make it more difficult for the Theme Portfolios to obtain
accurate market quotations for purposes of valuing the Theme Portfolios
portfolio investments. The Theme Portfolios may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Theme Portfolios may
invest include: (i) potential adverse publicity; (ii) heightened sensitivity to
general economic or political conditions; and (iii) the likely adverse impact of
a major economic recession. A Theme Portfolio may also incur additional expenses
to the extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Theme Portfolio may have
limited legal recourse in the event of a default.
LGT Asset Management attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors. Nonetheless, investors should carefully review the investment objective
and policies of each of the Theme Portfolios and consider their ability to
assume the investment risks involved before making an investment.
OTHER RISK FACTORS. While each Theme Portfolio's portfolio normally will include
securities of established suppliers of traditional products and services, each
Theme Portfolio may invest in smaller companies which can benefit from the
development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, but may also involve greater
risks than large, established issuers. Such smaller companies may have limited
product lines, markets or financial resources, and their securities may trade
less frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
LGT Asset Management believes that a global portfolio of investments in the
industries represented by the Theme Portfolios may be less subject to market
risk (the risk attendant to investing in a particular market) and price
fluctuation than a portfolio invested solely in the securities of domestic
issuers. Under each of the Theme Portfolios' policies, LGT Asset Management may
shift the country allocations of the Theme Portfolios' investments as market
conditions in individual countries change. Moreover, the number of different
investment opportunities from which the Theme Portfolios may choose is
significantly broader than that of a fund with a similar theme investing solely
in the securities of U.S. companies.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Theme Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to implement
strategies to attempt to hedge its portfolio, I.E.,
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GT GLOBAL THEME FUNDS
reduce the overall level of investment risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). Each Theme Portfolio may enter into such instruments up to
the full value of its portfolio assets. There can be no assurance that these
hedging efforts will succeed. These techniques are described below and are
further detailed in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, each Theme Portfolio may enter into forward currency contracts for
the purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Theme Portfolios may
enter into forward currency contracts either with respect to specific
transactions or with respect to that Theme Portfolio's portfolio positions. For
example, when a Theme Portfolio anticipates making a purchase or sale of a
security, that Theme Portfolio may enter into a forward currency contract in
order to set the rate (either relative to the U.S. dollar or another currency)
at which a currency exchange transaction related to the purchase or sale will be
made. Further, when LGT Asset Management believes that a particular currency may
decline compared to the U.S. dollar or another currency, a Theme Portfolio may
enter into a forward contract to sell the currency LGT Asset Management expects
to decline in an amount approximating the value of some or all of that Theme
Portfolio's portfolio securities denominated in a foreign currency.
Each Theme Portfolio also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, a Theme Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by that Theme Portfolio or that LGT Asset Management
intends to include in the Theme Portfolio's portfolio. The Theme Portfolio also
may purchase and sell put and call options on stock indexes. Such stock index
options serve to hedge against overall fluctuations in the securities markets
generally or in a specific market sector, rather than anticipated increases or
decreases in the value of a particular security.
Further, a Theme Portfolio may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market decline or a decline in a specific market sector
that could affect adversely a Theme Portfolio's holdings. A Theme Portfolio also
may buy stock index futures contracts and purchase call options or write put
options on such contracts to hedge against a general stock market or market
sector advance and thereby attempt to lessen the cost of future securities
acquisitions. A Theme Portfolio may use interest rate futures contracts and
options thereon to hedge the debt portion of its portfolio against changes in
the general level of interest rates.
In addition, each Theme Portfolio may purchase and sell put and call options on
securities, currencies and indices that are traded on recognized securities
exchanges and over-the-counter markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), limit the extent to which a Theme Portfolio may enter into forward
contracts, futures contracts or engage in options transactions. See "Taxes" in
the Statement of Additional Information.
Although a Theme Portfolio might not employ any of the foregoing strategies, its
use of forward currency contracts, options and futures would involve certain
investment risks and transaction costs to which it might not otherwise be
subject. These risks include: (1) dependence on LGT Asset Management's ability
to predict movements in the prices of individual securities, fluctuations in the
general securities markets or in the appropriate market sector and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of options, forward contracts,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which a Theme Portfolio invests; (4) lack of assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any particular time; (5) the possible inability of a Theme Portfolio to
purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for a Theme Portfolio to sell a
security at a disadvantageous time, due to the need for the
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GT GLOBAL THEME FUNDS
Theme Portfolio to maintain "cover" or to set aside securities in connection
with hedging transactions; and (6) the possible need to defer closing out of
certain options, futures contracts and options thereon and forward currency
contracts in order to qualify or continue to qualify for the beneficial tax
treatment afforded regulated investment companies under the Code. See
"Dividends, Other Distributions and Federal Income Taxation" herein and "Taxes"
in the Statement of Additional Information. If LGT Asset Management incorrectly
forecasts securities market movements, currency exchange rates or interest rates
in utilizing a strategy for a Theme Portfolio, the Theme Portfolio would be in a
better position if it had not hedged at all. A Theme Portfolio may also conduct
its foreign currency exchange transactions on a spot (I.E., cash) basis at the
spot rate prevailing in the foreign currency exchange market.
OTHER INFORMATION. The portfolio turnover rate for the fiscal year ended October
31, 1995 was 99% for the Health Care Fund, 170% for the Financial Services
Portfolio, and 240% for the Consumer Products and Services Portfolio. See the
sub-caption "Portfolio Trading and Turnover" in the Statement of Additional
Information. High portfolio turnover (over 100%) involves correspondingly
greater transaction costs in the form of dealer spreads or brokerage commissions
and other costs that a Fund will bear directly, and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders.
The investment objective of each Fund may not be changed without the approval of
a majority of that Fund's outstanding voting securities. As defined in the 1940
Act and as used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the outstanding shares. In addition, each Fund has adopted
certain investment limitations as fundamental policies which also may not be
changed without shareholder approval. Unless specifically noted, the Portfolios'
and the Funds' investment policies described in this Prospectus, and in the
Statement of Additional Information, including the policies with respect to
investment in its particular sector's securities and the percentage limitations
with respect to such investments, are not fundamental policies and may be
changed by vote of the Company's Board of Directors or the Portfolio's Board of
Trustees, as applicable, without shareholder approval. Each Fund's policies
regarding concentration and lending, and the percentage of that Fund's assets
that may be committed to borrowing, are fundamental policies and may not be
changed without shareholder approval. See "Investment Limitations" in the
Statement of Additional Information.
OTHER INFORMATION REGARDING THE PORTFOLIOS. The Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund may each withdraw its investment in its corresponding Portfolio at any
time, if the Board of Directors of the Company determines that it is in the best
interests of that Fund and its shareholders to do so. Upon such withdrawal, the
Board would consider what action might be taken, including the investment of all
the investable assets of that Fund in another pooled investment entity having
substantially the same investment objective as that Fund or the retention by
that Fund of its own investment adviser to manage that Fund's assets in
accordance with the investment objective, policies and limitations discussed
herein with respect to each such Fund and its investment in its corresponding
Portfolio.
The approval of the Financial Services Fund, Infrastructure Fund, Natural
Resources Fund and Consumer Products and Services Fund and of other investors in
their corresponding Portfolio, if any, is not required to change the investment
objective, policies or limitations of that Portfolio, unless otherwise
specified. Written notice shall be provided to shareholders of such Fund thirty
days prior to any changes in its corresponding Portfolio's investment objective.
If the objective of that Portfolio changes and the shareholders of the
corresponding Fund do not approve a parallel change in such Fund's investment
objective, that Fund would seek an alternative investment vehicle or directly
retain its own investment adviser.
As previously described, investors should be aware that the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund, unlike mutual funds which directly acquire and manage their own
portfolios of securities, seek to achieve their investment objective by
investing all of their investable assets in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio, respectively, each of which is a separate investment
company. Because its corresponding Fund will invest only in its corresponding
Portfolio, that Fund's shareholders will acquire only an indirect interest in
the investments of that Portfolio. LGT Asset Management and GT Global have
sponsored traditionally structured funds, and, therefore, have
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GT GLOBAL THEME FUNDS
limited experience with funds that invest all their assets in a separate
portfolio.
In addition to selling its interest to its corresponding Fund, the Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and
Consumer Products and Services Portfolio may each sell its interests to other
non-affiliated investment companies and/or other institutional investors. All
institutional investors in a Portfolio will pay a proportionate share of that
Portfolio's expenses and will invest in that Portfolio on the same terms and
conditions. However, if another investment company invests all of its assets in
a Portfolio, it would not be required to sell its shares at the same public
offering price as the Portfolio's corresponding Fund and may charge different
sales commissions. Therefore, investors in the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund may experience different returns from investors in another investment
company which invests exclusively in its corresponding Portfolio. As of the date
of this Prospectus, the Financial Services Fund, Infrastructure Fund, Natural
Resources Fund and Consumer Products and Services Fund are the only
institutional investors in their corresponding Portfolios.
Investors in the Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund should be aware that such Funds'
investment in its corresponding Portfolio may be materially affected by the
actions of large investors in such Portfolio, if any. For example, as with all
open-end investment companies, if a large investor were to redeem its interest
in a Portfolio, that Portfolio's remaining investors could experience higher pro
rata operating expenses, thereby producing lower returns. As a result, that
Portfolio's security holdings may become less diverse, resulting in increased
risk. Institutional investors in a Portfolio that have a greater pro rata
ownership interest in that Portfolio than its corresponding Fund could have
effective voting control over the operation of that Portfolio. A change in a
Portfolio's fundamental objective, policies and restrictions, which is not
approved by the shareholders of its corresponding Fund could require such Fund
to redeem its interest in the Portfolio. Any such redemption could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by that Portfolio. Should such a distribution occur, the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund and could affect adversely the liquidity of such Funds.
See "Management" for a description of the investment management fee and other
expenses associated with the investment of the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund in their corresponding Portfolios. This Prospectus and the Statement of
Additional Information contain more detailed information about the
organizational structure of the Financial Services Fund, Infrastructure Fund,
Natural Resources Fund and Consumer Products and Services Fund and their
corresponding Portfolios, including information related to: (i) the investment
objective, policies and restrictions of such Funds and their Portfolios; (ii)
the Board of Directors and officers of the Company, the Trustees and officers of
the Portfolios, the administrator of such Funds and the investment manager and
administrator of the Portfolios; (iii) portfolio transactions and brokerage
commissions; (iv) such Funds' shares, including the rights and liabilities of
its shareholders; (v) additional performance information, including the method
used to calculate yield and total return; and (vi) the determination of the
value of the shares of such Funds.
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GT GLOBAL THEME FUNDS
HOW TO INVEST
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GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 1,000 employees; (b) any
account with assets of at least $25,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of
at least $25,000 if (i) such account is established under a "wrap fee" program,
and (ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies comprising or affiliated with Liechtenstein
Global Trust; and (e) any of the companies comprising or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Fiduciaries and Financial Advisors may be
required to provide information satisfactory to GT Global concerning their
eligibility to purchase Advisor Class shares. Investors in Wrap Fee Accounts and
Advisory Accounts may only purchase Advisor Class shares through Financial
Advisors who have entered into agreements with GT Global or certain of its
affiliates. Investors may be charged a fee by their agents or brokers if they
effect transactions other than through a dealer.
Orders received by GT Global before the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on any
Business Day will be executed at the public offering price for the applicable
class of shares determined that day. A "Business Day" is any day Monday through
Friday on which the NYSE is open for business. All purchase orders will be
executed at the public offering price next determined after the purchase order
is received. The Funds and GT Global reserve the right to reject any purchase
order and to suspend the offering of shares for a period of time.
For more information on how to purchase shares, please contact your Financial
Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. A wire investment is
considered received when the Transfer Agent is notified that the bank wire has
been credited to a Fund. Prior telephonic or facsimile notice must be provided
to the Transfer Agent that a bank wire is being sent. A bank may charge a
service fee for wiring money to a Fund. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. For more information, please refer to the Shareholder
Account Manual in this Prospectus.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing the Funds' shares will not be issued unless a written request is
submitted to the Transfer Agent. Shares of the Funds are recorded on a register
by the Transfer Agent, and shareholders who do not elect to receive certificates
have the same rights of ownership as if certificates had been issued to them.
Redemptions and exchanges by shareholders who hold certificates may take longer
to effect than similar transactions involving non-certificated shares because
the physical delivery and processing of properly executed certificates is
required. ACCORDINGLY, THE FUNDS AND GT GLOBAL RECOMMEND THAT SHAREHOLDERS DO
NOT REQUEST ISSUANCE OF CERTIFICATES.
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GT GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
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Advisor Class shares of any Fund may only be exchanged for Advisor Class shares
of the other GT Global Mutual Funds, based on their respective net asset values,
provided that the registration remains identical. This exchange privilege is
available only in those jurisdictions where the sale of GT Global Mutual Fund
shares to be acquired may be legally made. EXCHANGES ARE NOT TAX-FREE AND WILL
RESULT IN A SHAREHOLDER REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX
PURPOSES. See "Dividends, Other Distributions and Federal Income Taxation." In
addition to the Theme Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND*
-- GT GLOBAL AMERICA GROWTH FUND
-- GTGLOBAL AMERICA SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL DOLLAR FUND
- --------------
* Formerly the G.T. Latin America Growth Fund.
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day.
EXCHANGES BY TELEPHONE. A shareholder may give exchange information to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates have previously been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. The Funds may be liable for any
losses due to unauthorized or fraudulent instructions if they do not follow
reasonable procedures.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectus of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus for
additional information.
OTHER INFORMATION ABOUT EXCHANGES. Purchases, redemptions and exchanges should
be made for investment purposes only. A pattern of frequent exchanges, purchases
and sales is not acceptable and can be limited by the Funds' or GT Global's
refusal to accept further purchase and exchange orders. The terms of the
exchange offer described above may be modified at any time, on 60 days' prior
written notice.
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GT GLOBAL THEME FUNDS
HOW TO REDEEM SHARES
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Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. All redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request in good order and any required
supporting documentation. Redemption requests received before the close of
regular trading on the NYSE on a Business Day will be effected at the net asset
value calculated on that day. Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor.
Shareholders with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares -- Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent, but reserves the right to do so in the future. The
shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. The Funds may be liable for any
losses due to unauthorized or fraudulent instructions if they do not follow
reasonable procedures.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her Financial Advisor.
Prospectus Page 33
<PAGE>
GT GLOBAL THEME FUNDS
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Funds have not
yet received good payment, the Funds may delay payment of redemption proceeds
until they have assured themselves that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 34
<PAGE>
GT GLOBAL THEME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders may be placed in accordance with this
Manual. PLEASE BE CAREFUL TO REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS
PROVIDED. See "How to Invest;" "How to Make Exchanges;" "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" and "How to Redeem Shares;"
for more information.
Each Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE APPROPRIATE CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO GT
GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire
instructions must state Fund name, class of shares, shareholder's registered
name and account number. Bank wires should be sent through the Federal Reserve
Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send the instructions to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global at 1-800-223-2138.
Prospectus Page 35
<PAGE>
GT GLOBAL THEME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time), each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund is the
value of each such Fund's investment in its corresponding Portfolio),
subtracting all of its liabilities, and dividing the result by the total number
of shares outstanding at such time. Net asset value is determined separately for
each class of shares of each Fund.
Equity securities held by the Theme Portfolios are valued at the last sale price
on the exchange or in the over-the-counter market in which such securities are
primarily traded, as of the close of business on the day the securities are
being valued, or, lacking any sales, at the last available bid price. Long-term
debt obligations are valued at the mean of representative quoted bid and asked
prices for such securities or, if such prices are not available, at prices for
securities of comparable maturity, quality and type; however, when LGT Asset
Management deems it appropriate, prices obtained from a bond pricing service
will be used. Short-term debt investments are amortized to maturity based on
their cost, adjusted for foreign exchange translation and market fluctuations,
provided such valuations represent fair value. When market quotations for
futures and options positions held by a Fund are readily available, those
positions are valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolios' Board of
Trustees, as applicable. Securities and other assets quoted in foreign
currencies are valued in U.S. dollars based on the prevailing exchange rates on
that day.
Certain of the Theme Portfolios' securities from time to time may be listed
primarily on foreign exchanges which trade on days when the NYSE is closed (such
as a Saturday). As a result, the net asset value of a Fund's shares may be
significantly affected by such trading on days when shareholders have no access
to that Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
of its net investment income, if any, which includes dividends, accrued interest
and earned discount (including both original issue and market discounts) less
applicable expenses. Each Fund also annually distributes substantially all of
its realized net short-term capital gain (the excess of short-term capital gains
over short-term capital losses), net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net gains from foreign
currency transactions, if any. Each Fund may make an additional dividend or
other distribution if necessary to avoid a 4% excise tax on certain
undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares of a Fund will be higher than the
per share income dividends on shares of other classes of that Fund as a result
of the service and distribution fees applicable to those other shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class
Prospectus Page 36
<PAGE>
GT GLOBAL THEME FUNDS
shares of the distributing Fund (or other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE DISTRIBUTING FUND.
Reinvestments in another GT Global Mutual Fund may only be directed to an
account with the identical shareholder registration and account number. These
elections may be changed by a shareholder at any time; to be effective with
respect to a distribution, the shareholder or the shareholder's broker must
contact the Transfer Agent by mail or telephone at least 15 Business Days prior
to the payment date. THE FEDERAL INCOME TAX STATUS OF DIVIDENDS AND OTHER
DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders. Each Portfolio expects that it also will not be
liable for any federal income tax.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to its shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes treated as paid by the Fund, in which event each
shareholder would be required to include in his or her gross income his or her
pro rata share of those taxes but might be entitled to claim a credit or
deduction for them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with a
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. In addition, if Fund shares are
purchased within 90 days before or after redeeming other shares of the same Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally
Prospectus Page 37
<PAGE>
GT GLOBAL THEME FUNDS
affecting the Funds and their shareholders. See "Taxes" in the Statement of
Additional Information for a further discussion. There may be other federal,
state, local or foreign tax considerations applicable to a particular investor.
Prospective investors therefore are urged to consult their tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolios,
respectively, and have approved contracts with various financial organizations
to provide certain services required by each Fund. See "Directors, Trustees, and
Executive Officers" in the Statement of Additional Information for a complete
description of the Directors of the Funds and the Trustees of the Portfolios. A
majority of the disinterested members (as defined in the 1940 Act) of the Board
of Directors of the Company and the Board of Trustees of the Portfolios have
adopted written procedures reasonably appropriate to deal with potential
conflicts of interest arising concerning the Funds and their corresponding
Portfolios up to and including creating a separate Board of Trustees for the
Portfolios.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by LGT Asset
Management as the Theme Portfolios' investment manager and administrator
include, but are not limited to, determining the composition of the investment
portfolio of the Portfolios and placing orders to buy, sell or hold particular
securities. In addition, LGT Asset Management provides the following
administration services to the Portfolios and the Funds: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Portfolios' and the Funds' operation.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each pays LGT Asset Management
administration fees computed daily and payable monthly at the annualized rate of
0.25% of such Fund's average daily net assets. In addition, each such Fund bears
its pro rata portion of the investment management and administration fees paid
by its corresponding Portfolio to LGT Asset Management. The Financial Services
Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and Consumer
Products and Services Portfolio each pays such fees, based on the average daily
net assets of such Portfolio, directly to LGT Asset Management at the annualized
rate of .725% on the first $500 million, .70% on the next $500 million, .675% on
the next $500 million and .65% on all amounts thereafter. For investment
management and administration services provided to the Health Care Fund and
Telecommunications Fund, each such Fund pays LGT Asset Management a fee computed
daily and paid monthly based on each such Fund's average daily net assets at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million and .90% on amounts thereafter. These
rates are higher than those paid by most mutual funds. LGT Asset Management has
undertaken to limit expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the annual rate of 1.90% of the average
daily net assets of each Fund's Advisor Class shares.
LGT Asset Management also serves as each Theme Portfolio's pricing and
accounting agent. The monthly fee for these services to LGT Asset Management is
a percentage, not to exceed 0.03% annually, of the Fund's average daily net
assets. The annual fee rate is derived by applying 0.03% to the first $5 billion
of assets of GT Global Mutual Funds and 0.02% to the assets in excess of $5
billion, and allocating the result according to each Fund's average daily net
assets.
LGT Asset Management provides investment management and/or administration
services to the GT Global Mutual Funds. LGT Asset Management and its worldwide
asset management affiliates have provided investment management and/or
administration services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGT Asset Management are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
Prospectus Page 38
<PAGE>
GT GLOBAL THEME FUNDS
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust, formerly BIL GT Group Limited. Liechtenstein Global Trust is a provider
of global asset management and private banking products and services to
individual and institutional investors. Liechtenstein Global Trust is controlled
by the Prince of Liechtenstein Foundation, which serves as the parent
organization for the various business enterprises of the Princely Family of
Liechtenstein. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1995, LGT Asset Management and its worldwide affiliates
managed approximately $27 billion, of which approximately $15 billion consists
of GT Global retail funds worldwide. In the U.S., as of December 31, 1995, LGT
Asset Management managed or administered approximately $10 billion in GT Global
Mutual Funds. As of December 31, 1995, assets under advice by LGT Bank in
Liechtenstein exceeded approximately $18 billion. As of December 31, 1995,
assets entrusted to Liechtenstein Global Trust totaled approximately $45
billion.
In addition to the resources of its San Francisco office, LGT Asset Management
uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Sydney and Frankfurt. In managing the GT Global Mutual Funds,
LGT Asset Management employs a team approach, taking advantage of the resources
of these various investment offices around the world in seeking to achieve each
Fund's investment objective. Many of the investment managers who manage the GT
Global Mutual Funds' portfolios are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
The investment professionals primarily responsible for the portfolio management
of the Theme Portfolios are as follows:
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for LGT Management
San Francisco since 1995. Analyst for LGT Asset
Management from 1994 to 1995. From
1992 to 1994, Mr. Ellman was a
student at the Harvard Graduate
School of Business Administration
(where he received a Master of
Business Administration). From 1990
to 1992, Mr. Ellman was employed by
the Federal Reserve Bank of New York
as an international bank examiner.
</TABLE>
Prospectus Page 39
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
GLOBAL INFRASTRUCTURE PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
David L. Sherry Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1993. From 1992 to
1993, Mr. Sherry was Senior
Securities Analyst for Franklin
Resources, Inc. (San Mateo, CA). From
1990 to 1992, he was a student at
University of California at Los
Angeles Graduate School of Business
(where he received a Master of
Business Administration.) Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
Michael Mahoney Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1993. From 1991 to
1993, Mr. Mahoney was an Investment
Analyst for LGT Asset Management.
From 1989 to 1991, he was a student
at Stanford Graduate School of
Business (where he received a Master
of Business Administration). Prior
thereto, he was a Management
Consultant for Bain & Co., management
consulting (Boston).
GLOBAL NATURAL RESOURCES PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1994. Analyst for
LGT Asset Management from 1992 to
1994. From 1990 to 1992, Mr. Webb was
a student at the University of
Pennsylvania, Wharton School of
Business. During 1989, he was Vice
President, Citicorp Investment Bank
of Los Angeles. Prior thereto, he was
a Bond Trader, Trust Co. of the West
(Los Angeles).
</TABLE>
Prospectus Page 40
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Portfolio Portfolio Manager for LGT Asset
San Francisco inception in 1994 Management since 1994. Analyst for
LGT Asset Management from 1992 to
1994. From 1990 to 1992, Mr. Webb was
a student at the University of
Pennsylvania, Wharton School of
Business. During 1989, he was Vice
President, Citicorp Investment Bank
of Los Angeles. Prior thereto, he was
a Bond Trader, Trust Co. of the West
(Los Angeles).
GLOBAL HEALTH CARE FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Edward R. Gomoll Portfolio Manager since Fund inception Portfolio Manager for LGT Asset
San Francisco in 1989 Management.
Michael Yellen Research Analyst since 1994 Research analyst for LGT Asset
San Francisco Management since 1994. From 1991 to
1994, Mr. Yellen was a securities
analyst and co-portfolio manager for
Franklin Resources, Inc. (San Mateo,
CA). Prior thereto, Mr. Yellen was a
student at Stanford University, where
he received a Bachelor's Degree in
International Relations.
</TABLE>
Prospectus Page 41
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
GLOBAL TELECOMMUNICATIONS FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Michael Mahoney Portfolio Manager since 1993 Portfolio Manager for LGT Asset
San Francisco Management since 1993. From 1991 to
1993, Mr. Mahoney was an Investment
Analyst for LGT Asset Management.
From 1989 to 1991, he was a student
at Stanford Graduate School of
Business (where he received a Master
of Business Administration). Prior
thereto, he was a Management
Consultant for Bain & Co., management
consulting (Boston).
David L. Sherry Portfolio Manager since 1993 Portfolio Manager for LGT Asset
San Francisco Management since 1993. From 1992 to
1993, Mr. Sherry was Senior
Securities Analyst for Franklin
Resources, Inc. (San Mateo, CA). From
1990 to 1992, he was a student at
University of California at Los
Angeles Graduate School of Business
(where he received a Master of
Business Administration). Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for LGT Management
San Francisco since 1995. Analyst for LGT Asset
Management from 1994 to 1995. From
1992 to 1994, Mr. Ellman was a
student at the Harvard Graduate
School of Business Administration
(where he received a Master of
Business Administration). From 1990
to 1992, Mr. Ellman was employed by
the Federal Reserve Bank of New York
as an international bank examiner.
</TABLE>
Prospectus Page 42
<PAGE>
GT GLOBAL THEME FUNDS
In placing orders for the Theme Portfolios' securities transactions, LGT Asset
Management seeks to obtain the best net results. LGT Asset Management has no
agreement or commitment to place orders with any broker-dealer. Commissions or
discounts in foreign securities exchanges and OTC markets often are fixed and
generally are higher than those in U.S. securities exchanges or markets. Debt
securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
governmental securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occassion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/ dealers may receive commissions on
futures, currency and options transactions. Consistent with its obligation to
obtain the best net results, LGT Asset Management may consider a broker/
dealer's sale of shares of the GT Global Mutual Funds as a factor in considering
through whom portfolio transactions will be effected. Brokerage transactions for
the Fund may be executed through any Liechtenstein Global Trust affiliates.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor, or principal
underwriter, of the Funds' Advisor Class shares. Like LGT Asset Management, GT
Global is a subsidiary of Liechtenstein Global Trust with offices at 50
California Street, 27th Floor, San Francisco, CA 94111.
LGT Asset Management or an affiliate thereof may make ongoing payments to
Financial Advisors and others that facilitate the administration and servicing
of Advisor Class shareholder accounts.
GT Global, at its own expense, may also provide promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other GT
Global Mutual Funds. In some instances compensation or promotional incentives
may be offered to broker/dealers that have sold or may sell significant amounts
of shares during specified periods of time. Such compensation and incentives may
include, but are not limited to, cash, merchandise, trips and financial
assistance to broker/dealers in connection with preapproved conferences or
seminars, sales or training programs for invited sales personnel, payment for
travel expenses (including meals and lodging) incurred by sales personnel and
members of their families or other invited guests to various locations for such
seminars or training programs, seminars for the public, advertising and sales
campaigns regarding one or more of the GT Global Mutual Funds, and/ or other
events sponsored by the broker/dealers.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
Prospectus Page 43
<PAGE>
GT GLOBAL THEME FUNDS
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, such as an additional investment,
redemption or the payment of a dividend or distribution, the shareholder will
receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to a Fund's
automatic dividend reinvestment program may be provided quarterly. Shortly after
the end of each Fund's fiscal year on October 31 and fiscal half-year on April
30 of each year, shareholders receive an annual and semiannual report,
respectively. These reports list the securities held by each Fund and contain
each Fund's financial statements. In addition, the federal income status of
distributions made by a Fund to shareholders will be reported after the end of
the fiscal year on Form 1099-DIV. Under certain circumstances, duplicate
mailings of such reports to the same household may be consolidated.
ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has and may continue to
establish other funds, each corresponding to a distinct investment portfolio and
a distinct series of the Company's common stock. Shares of each Fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive or conversion
rights.
On any matter submitted to a vote of shareholders, shares of a Fund will be
voted by a Fund's shareholders individually when the matter affects the specific
interest of that Fund only, such as approval of its investment management
arrangements. In addition, each class of shares of a Fund has exclusive voting
rights with respect to its distribution plan. The shares of each Fund and of all
the Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the selection by the Board of
Directors of the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Each Fund would be required to hold a shareholders'
meeting in the event that at any time less than a majority of the Directors
holding office had been elected by shareholders. Directors shall continue to
hold office until their successors are elected and have qualified. Shares of
each Fund and of the Company's other funds do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the election
of Directors can elect all the Directors. A Director may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting shares may call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Director or for any other purpose. The 1940 Act requires the Company to
assist shareholders in calling such a meeting.
Advisor Class shares are offered through this Prospectus to certain investors.
There are two other classes of shares offered to investors through a separate
prospectus: Class A shares and Class B shares.
CLASS A. Class A shares are sold at net asset value plus an initial sales charge
of up to 4.75% of the public offering price imposed at the time of purchase.
This initial sales charge is reduced or waived for certain purchases. Class A
shares of each Fund also bear annual service and distribution fees of up to
0.50% of the average daily net assets of that class. For the fiscal year ended
October 31, 1995, total operating expenses for the Class A shares were 2.40% for
Financial Services Fund, 2.40% for Infrastructure Fund, 2.40% for Natural
Resources Fund, 1.91% for Health Care Fund, 1.83% for Telecommunications Fund,
and 2.40% for Consumer Products and Services Fund, respectively, of average net
assets.
CLASS B. Class B shares are sold at net asset value with no initial sales charge
at the time of purchase. Class B shares bear annual service and distribution
fees of up to 1.00% of the average daily net assets of that class, and investors
pay a contingent deferred sales charge of up to 5% of the lesser of the original
purchase price or the net asset value of such shares at the time of redemption.
This deferred sales charge is waived for certain redemptions and is reduced for
shares held more than one year. For the fiscal year ended October 31,
Prospectus Page 44
<PAGE>
GT GLOBAL THEME FUNDS
1995, total operating expenses for the Class B shares were 2.90% for Financial
Services Fund, 2.90% for Infrastructure Fund, 2.90% for Natural Resources Fund,
2.41% for Health Care Fund, 2.33% for Telecommunications Fund, and 2.90% for
Consumer Products and Services Fund, respectively, of average net assets.
The different expenses borne by each class of shares will result in different
net asset values and dividends. The per share net asset value of the Advisor
Class shares of a Fund generally will be higher than that of the Class A and B
shares of that Fund because of the higher expenses borne by the Class A and B
shares. The per share dividends on Advisor Class shares of a Fund will generally
be higher than the per share dividends on Class A and B shares of that Fund as a
result of the service and distribution fees applicable with respect to Class A
and B shares. Consequently, during comparable periods, the Funds expect that the
total return on an investment in shares of the Advisor Class will be higher than
the total return on Class A or Class B shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of
each Fund, 100 million shares as Class A shares and 100 million shares as Class
B shares, except for the Telecommunications Fund, of which 200 million shares
have each been classified as Class A shares and Class B shares, respectively.
100 million shares have been classified as Advisor Class shares for each Fund.
These amounts may be increased from time to time in the discretion of the Board
of Directors. Each share of each Fund represents an interest in that Fund only,
has a par value of $0.0001 per share, represents an equal proportionate interest
in that Fund with other shares of that Fund and is entitled to such dividends
and other distributions out of the income earned and gain realized on the assets
belonging to that Fund as may be declared at the discretion of the Board of
Directors. Each Class A, Class B and Advisor Class share of each Fund is equal
as to earnings, assets and voting privileges, except as noted above, and each
class bears the expenses, if any, related to the distribution of its shares.
Shares of each Fund when issued are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIOS. Each Portfolio is organized as a subtrust of a
New York common law trust. The Declaration of Trust provides that the Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund and other entities investing in its corresponding Portfolio
(E.G., other investment companies, insurance company separate accounts and
common and commingled trust funds), if any, each will be liable for all
obligations of that Portfolio. However, the Directors of the Company believe
that the risk of such Funds' incurring financial loss because of such liability
is limited to circumstances in which both inadequate insurance existed and each
of the Portfolios itself was unable to meet its obligations, and that neither
the Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund nor their shareholders will be exposed to a
material risk of liability by reason of the Funds' investing in their
corresponding Portfolios.
Whenever the Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund is requested to vote on any
proposal of its corresponding Portfolio, such Fund will hold a meeting of such
Fund's shareholders and will cast its vote as instructed by its shareholders.
Because a Portfolio investors' votes are proportionate to their percentage
interests in that Portfolio, one or more other Portfolio investors could, in
certain instances, approve an action against which a majority of the outstanding
voting securities of its corresponding Fund had voted. This could result in that
Fund's redeeming its investment in its corresponding Portfolio, which could
result in increased expenses for that Fund. Shares for which no voting
instructions are received will be voted in the same proportion as the shares for
which voting instructions are received. Any information received from the
Financial Services Portfolio, Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio in the Portfolio's report
will be provided to the shareholders of its corresponding Fund.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Funds at P.O. Box 7893, San
Francisco, CA 94120-7893.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, the Funds may quote their average annual total return
("Standardized
Prospectus Page 45
<PAGE>
GT GLOBAL THEME FUNDS
Return"). Standardized Return is calculated separately for each class of shares
of each Fund. Standardized Return shows percentage rates reflecting the average
annual change in the value of an assumed investment in a Fund at the end of a
one-year period and at the end of five- and ten-year periods, reduced by the
maximum applicable sales charge imposed on sales of Fund shares. If a one-,
five- and/or ten-year period has not yet elapsed, data will be provided as of
the end of a shorter period corresponding to the life of a Fund. Standardized
Return assumes the reinvestment of all dividends and other distributions at net
asset value on the reinvestment date as established by the Board of Directors.
In addition, in order to more completely represent the Funds' performance or
more accurately compare such performance to other measures of investment return,
the Funds also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Funds' performance data will reflect past performance and will not
necessarily be indicative of future results. The Funds' investment results will
vary from time to time depending upon market conditions, the composition of
their portfolios and their operating expenses. These factors and possible
differences in calculation methods should be considered when comparing a Fund's
investment results with those published for other investment companies, other
investment vehicles and unmanaged indices. Each Fund's results also should be
considered relative to the risks associated with its investment objective and
policies. See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of LGT Asset Management and GT Global, a
subsidiary of Liechtenstein Global Trust and maintains offices at California
Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the assets of the Portfolios, Health Care
Fund and Telecommunications Fund.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and to the
Theme Portfolios. Kirkpatrick & Lockhart LLP also acts as counsel to LGT Asset
Management, GT Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Theme Portfolios' independent accountants are
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts 02109.
Coopers & Lybrand L.L.P. conducts an annual audit of the Funds and Portfolios,
assists in the preparation of the Funds' and Portfolios' federal and state
income tax returns and consults with the Company and the Funds and the
Portfolios as to matters of accounting, regulatory filings, and federal and
state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 46
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 47
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 48
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 49
<PAGE>
<TABLE>
<S> <C> <C>
GT GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ADVISOR CLASS
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
[LGT LOGO]
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for
Uniform Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under
which the custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $500 minimum initial investment for each Fund is required. Checks should be made payable to "GT GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 413 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
405 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 424 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
416 / / GT GLOBAL EMERGING MARKETS FUND $ 406 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
411 / / GT GLOBAL HEALTH CARE FUND $ 423 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
415 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 404 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / GT GLOBAL INFRASTRUCTURE FUND $ 410 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / GT GLOBAL FINANCIAL SERVICES FUND $ 409 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / GT GLOBAL NATURAL RESOURCES FUND $ 408 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / GT GLOBAL CONSUMER PRODUCTS $ 418 / / GT GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
402 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 401 / / GT GLOBAL DOLLAR FUND $
---------- ----------
403 / / GT GLOBAL EUROPE GROWTH FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND
I/WE AGREE TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS'
TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC
INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH LOSS OR
DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE INVESTOR(S)
CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS
AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL GT GLOBAL, INC., G.T.
GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS,
INC. OR THE FUNDS' TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR
REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME
CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE
GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number ("Number") provided on this form is my (or my employer's, trust's,
minor's or other payee's) true, correct and complete Number and may be
assigned to any new account opened under the exchange privilege. I further
certify that I am (or the payee whose Number is given is) not subject to
backup withholding because: (a) I am (or the payee is) exempt from backup
withholding; (b) the Internal Revenue Service (the "I.R.S.") has not notified
me that I am (or the payee is) subject to backup withholding as a result of a
failure to report all interest or dividends; OR (c) the I.R.S. has notified me
that I am (the payee is) no longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name
- ------------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the GT Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
GT Global, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY G.T. INVESTMENT FUNDS, INC., GT GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, GT GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, GT GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, GT GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
GT GLOBAL HEALTH CARE FUND, GT GLOBAL TELECOMMUNICATIONS FUND, LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON IN SUCH JURISDICTION TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THEPV60206.5MC
<PAGE>
GT GLOBAL THEME FUNDS: ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
February 29, 1996
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
GT Global Financial Services Fund ("Financial Services Fund"), GT Global
Infrastructure Fund ("Infrastructure Fund"), GT Global Natural Resources Fund
("Natural Resources Fund"), GT Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), GT Global Health Care Fund ("Health
Care Fund") and GT Global Telecommunications Fund ("Telecommunications Fund")
(individually, "Fund" or "Theme Fund," collectively, "Funds," "Theme Funds").
Each Fund (except for Health Care Fund) is a diversified series of G.T.
Investment Funds, Inc. ("Company"), a registered open-end management investment
company. The Health Care Fund is organized as a non-diversified series of the
Company. The Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund (individually, "Feeder Fund,"
collectively "Feeder Funds,") invest all of their investable assets in the
Global Financial Services Portfolio, Global Infrastructure Portfolio, Global
Natural Resources Portfolio and Global Consumer Products and Services Portfolio
(individually, "Portfolio," collectively, "Portfolios"), respectively. This
Statement of Additional Information, which is not a prospectus, supplements and
should be read in conjunction with the GT Global Theme Funds' current Advisor
Class Prospectus dated February 29, 1996, a copy of which is available without
charge by writing to the above address or calling the Funds at the toll-free
telephone number printed above.
LGT Asset Management, Inc. ("LGT Asset Management") serves as the investment
manager of and administrator for the Health Care Fund, Telecommunications Fund
and the Portfolios (each a "Theme Portfolio"), and also serves as the
administrator for each Feeder Fund. The principal underwriter and distributor of
the Funds' shares is GT Global, Inc. ("GT Global"). The Funds' transfer agent is
GT Global Investor Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 22
Directors and Executive Officers......................................................................................... 24
Management............................................................................................................... 26
Valuation of Fund Shares................................................................................................. 29
Information Relating to Sales and Redemptions............................................................................ 30
Taxes.................................................................................................................... 32
Additional Information................................................................................................... 35
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 46
Financial Statements..................................................................................................... 48
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of each Feeder Fund is long-term capital growth. The
investment objective of the GT Global Health Care Fund and Telecommunications
Fund is long-term capital appreciation and long-term growth of capital,
respectively.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Financial Services
Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and Consumer
Products and Services Portfolio, respectively, each of which is a subtrust (a
"series") of Global Investment Portfolio (an open-end management investment
company) with an investment objective that is identical to that of its
corresponding Fund. Whenever the phrase "all of the Funds' investable assets" is
used herein and in the Prospectus, it means that the only investment securities
that will be held by a Feeder Fund will be that Fund's interest in its
corresponding Portfolio. A Feeder Fund may withdraw its investment in its
corresponding Portfolio at any time, if the Board of Directors of the Company
determines that it is in the best interests of such Fund and its shareholders to
do so. Upon any such withdrawal, a Feeder Fund's assets would be invested in
accordance with the investment policies described below and in the Prospectus
with respect to its corresponding Portfolio.
SELECTION OF EQUITY INVESTMENTS
In analyzing the natural resource industry, LGT Asset Management has identified
four areas that it expects will create investment opportunities: (i) improving
supply/demand fundamentals, which may result in higher commodity prices; (ii)
privatization of state-owned natural resource businesses; (iii) management which
can improve production efficiencies without correspondingly increasing commodity
prices; and (iv) service companies with emerging technologies that can enhance
productivity or reduce production costs. Of course, there is no certainty that
these factors will produce the anticipated results.
In analyzing the telecommunications industry, LGT Asset Management has
identified four areas that it expects will create investment opportunities: (i)
deregulation of companies in the industry, which will allow competition to
promote greater efficiencies; (ii) privatization of state-owned
telecommunications businesses; (iii) development of infrastructure in
underdeveloped countries and upgrading of services in other countries; and (iv)
emerging technologies that will enhance productivity and reduce costs in the
telecommunications industry. Of course, there is no certainty that these factors
will produce the anticipated results.
There may be times when, in the opinion of LGT Asset Management, prevailing
market, economic or political conditions warrant reducing the proportion of the
Theme Portfolios' assets invested in equity securities and increasing the
proportion held in cash (U.S. dollars, foreign currencies or multinational
currency units) or invested in debt securities or high quality money market
instruments issued by corporations or the U.S., or a foreign government. A
portion of each Theme Portfolio's assets normally will be held in cash (U.S.
dollars, foreign currencies or multinational currency units) or invested in
foreign or domestic high quality money market instruments pending investment of
proceeds from new sales of Fund Shares to provide for ongoing expenses and to
satisfy redemptions.
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it (a) is organized under the
laws of or has its principal office in a particular country, or (b) normally
derives 50% or more of its total revenues from business in that country,
provided that, in LGT Asset Management's view, the value of such issuer's
securities will tend to reflect such country's development to a greater extent
than developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by LGT
Asset Management to be located in that country may have substantial foreign
operations or subsidiaries and/or export sales exceeding in size the assets or
sales in that country.
In certain countries, governmental restrictions and other limitations on
investment may affect a Theme Portfolio's ability to invest in such countries.
In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals. LGT
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Asset Management is not aware at this time of the existence of any investment or
exchange control regulations which might substantially impair the operations of
the Theme Portfolios as described in the Prospectus and this Statement of
Additional Information. Restrictions may in the future, however, make it
undesirable to invest in certain countries. None of the Theme Portfolios has a
present intention of making any significant investment in any country or stock
market in which LGT Asset Management considers the political or economic
situation to threaten a Theme Portfolio with substantial or total loss of its
investment in such country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
Each Theme Portfolio may invest in the securities of investment companies within
the limits of the Investment Company Act of 1940, as amended (the "1940 Act").
These limitations currently provide that, in general, a Theme Portfolio may
purchase shares of an investment company unless (a) such a purchase would cause
a Theme Portfolio to own in the aggregate more than 3% of the total outstanding
voting stock of the investment company or (b) such a purchase would cause the
Theme Portfolio to have more than 5% of its assets invested in the investment
company or more than 10% of its assets invested in an aggregate of all such
investment companies. The foregoing restrictions do not apply to the investment
of the Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund in their corresponding Portfolios.
Investment in closed-end investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
Each Theme Portfolio does not intend to invest in such investment companies
unless, in the judgment of LGT Asset Management, the potential benefits of such
investments justify the payment of any applicable premiums. The yield of such
securities will be reduced by operating expenses of such companies, including
payments to the investment managers of those investment companies.
DEPOSITORY RECEIPTS
A Theme Portfolio may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs are typically issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally, ADRs and ADSs in
registered form are designed for use in U.S. securities markets and EDRs in
bearer form are designed for use in European securities markets. For purposes of
each Theme Portfolio's investment policies, a Theme Portfolio's investments in
ADRs, ADSs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Theme Portfolio in connection with other
securities or separately and provide the Theme Portfolio with the right to
purchase at a later date other securities of the issuer. As a condition of
continued registration in a state, each Theme Portfolio has undertaken that its
investments in warrants or rights, valued at the lower of cost or market, will
not exceed 5% of the value of its net assets and not more than 2% of such assets
will be invested in
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GT GLOBAL THEME FUNDS
warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by a Theme Portfolio in units or attached
to securities will be deemed to be without value for purposes of this
restriction.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Theme Portfolio may make
secured loans of its securities holdings amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the securities
lent plus any accrued interest, "marked to market" on a daily basis. The
collateral received will consist of cash, U.S. short-term government securities,
bank letters of credit or such other collateral as may be permitted under a
Theme Portfolio's investment policies and by regulatory agencies and approved by
the Portfolios' Board of Trustees or the Company's Board of Directors, as
applicable. The Theme Portfolios may pay reasonable administrative and custodial
fees in connection with the loans of their securities. While the securities loan
is outstanding, a Theme Portfolio will continue to receive the equivalent of the
interest or dividends paid by the issuer on the securities, as well as interest
on the investment of the collateral or a fee from the borrower. A Theme
Portfolio will have a right to call each loan and obtain the securities on five
business days' notice. A Theme Portfolio will not have the right to vote equity
securities while they are being lent, but it may call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Loans will only be made to
firms deemed by LGT Asset Management to be of good standing and will not be made
unless, in the judgment of LGT Asset Management, the consideration to be earned
from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Theme Portfolio's investment policies with respect to
bank obligations, obligations of foreign branches of U.S. banks and of foreign
banks are obligations of the issuing bank and may be general obligations of the
parent bank. Such obligations may, however, be limited by the terms of a
specific obligation and by government regulation. As with investments in
non-U.S. securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject each Theme Portfolio to
investment risks that are different in some respects from those of investments
in obligations of U.S. issuers. Although each Theme Portfolio will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of each Theme
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a Theme Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date, and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the Theme
Portfolio if the other party to the repurchase agreement becomes bankrupt, the
Theme Portfolios intend to enter into repurchase agreements only with banks and
dealers believed by LGT Asset Management to present minimal credit risks in
accordance with guidelines established by the Company's Board of Directors, or a
Portfolio's Board of Trustees, as applicable. LGT Asset Management will review
and monitor the creditworthiness of such institutions under the applicable
Board's general supervision.
Each Theme Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price, a
Theme Portfolio would suffer a loss. If the financial institution which is party
to the repurchase agreement petitions for bankruptcy or otherwise becomes
subject to bankruptcy or other liquidation proceedings, there may be
restrictions on a Theme Portfolio's ability to sell the collateral and a Theme
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, each Theme Portfolio intends to comply with provisions under such Code
that would allow the immediate resale of such collateral. Each Theme Portfolio
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of the value of its net assets (except for
Health Care Fund, more than 10% of the value of its total assets) would be
invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets,
i.e., the Theme Portfolio's total assets at all times will equal at least 300%
of the amount of outstanding borrowings. If market fluctuations in the value of
a Theme
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GT GLOBAL THEME FUNDS
Portfolio's securities holdings or other factors cause the ratio of a Theme
Portfolio's total assets to outstanding borrowings to fall below 300%, within
three days (excluding Sundays and holidays) of such event that Theme Portfolio
may be required to sell portfolio securities to restore the 300% asset coverage,
even though from an investment standpoint such sales might be disadvantageous.
Each Theme Portfolio may also borrow up to 5% of its total assets for temporary
or emergency purposes other than to meet redemptions. Any borrowing by a Theme
Portfolio may cause greater fluctuation in the value of its shares than would be
the case if that Theme Portfolio did not borrow.
Each Theme Portfolio's fundamental investment limitations permit the Theme
Portfolio to borrow money for leveraging purposes. However, each Theme Portfolio
(except the Health Care Fund) is currently prohibited, pursuant to a non-
fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
Company's Board of Directors or the Portfolios' Board of Trustees, as
applicable. In the event that a Theme Portfolio employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the net asset value of the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund, Consumer Products and Services Fund or a Theme
Portfolio. When the income and gains on securities purchased with the proceeds
of borrowings exceed the costs of such borrowings, a Theme Portfolio's earnings
or a Fund's net asset value will increase faster than otherwise would be the
case; conversely, if such income and gains fail to exceed such costs, a Theme
Portfolio's earnings or a Fund's net asset value would decline faster than would
otherwise be the case.
Each Theme Portfolio may enter into reverse repurchase agreements, which involve
the sale of a security by a Theme Portfolio and its agreement to repurchase the
security at a specified time and price. Each Theme Portfolio may also engage in
"roll" transactions, which involve the sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which the Theme Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Theme Portfolio will maintain, in a
segregated account with a custodian, cash, U.S. government securities or other
liquid, high-grade debt securities in an amount sufficient to cover its
obligations under "roll" transactions and reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
SHORT SALES
Each Theme Portfolio (except the Health Care Fund) is authorized to make short
sales of securities. A short sale is a transaction in which a Theme Portfolio
sells a security in anticipation that the market price of that security will
decline. A Theme Portfolio may make short sales (i) as a form of hedging to
offset potential declines in long positions in securities it owns, or
anticipates acquiring, or in similar securities, and (ii) in order to maintain
flexibility in its securities holdings.
When a Theme Portfolio makes a short sale of a security it does not own, it must
borrow the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Theme Portfolio may have
to pay a fee to borrow particular securities and will often be obligated to pay
over any payments received on such borrowed securities.
A Theme Portfolio's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral (usually cash, U.S.
government securities or other liquid, high grade debt securities) deposited
with the intermediary. The Theme Portfolio will also be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by that Theme Portfolio on such
security, a Theme Portfolio may not receive any payments (including interest) on
its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time a Theme Portfolio replaces the borrowed security, that Theme
Portfolio will incur a loss; conversely, if the price declines, the Theme
Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although a
Theme Portfolio's gain is limited by the price at which it sold the security
short, its potential loss theoretically is unlimited.
No Theme Portfolio will make a short sale if, after giving effect to such sale,
the market value of the securities sold short exceeds 25% of the value of its
total assets or the Theme Portfolio's aggregate short sales of the securities of
any one issuer exceed the lesser of 2% of the Theme Portfolio's net assets or 2%
of the securities of any class of the issuer. Moreover, a Theme Portfolio may
engage in short sales only with respect to securities listed on a national
securities exchange. A Theme Portfolio may make short sales "against the box"
without respect to such limitations. In this type of short sale, at the time of
the sale the Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon LGT Asset
Management's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While LGT Asset Management is
experienced in the use of these instruments, there can be no assurance that
any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruemtns on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Theme Portfolio
entered into a short hedge because LGT Asset Management projected a decline
in the price of a security in the Theme Portfolio's portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Theme Portfolio
could suffer a loss. In either such case, the Theme Portfolio would have
been in a better position had it not hedged at all.
(4) As described below, a Theme Portfolio might be required to maintain
assets as "cover," maintain segregated accounts or make margin payments when
it takes positions in instruments involving obligations to third parties
(i.e., instruments other than purchased options). If the Theme Portfolio
were unable to close out its positions in such instruments, it might be
required to continue to maintain such assets or accounts or make such
payments until the position expired or matured. The requirements might
impair the Theme Portfolio's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Theme Portfolio sell a portfolio security at a
disadvantageous time. The Theme Portfolio's ability to close out a position
in an instrument prior to expiration or maturity depends on the existence of
a liquid secondary market or, in the absence of such a market, the ability
and willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of LGT Asset Management are not expected to make any major
price moves in the near future but that, over the long term, are deemed to be
attractive investments for the Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or an (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
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Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise price,
and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio will realize a gain or loss from the
sale of the underlying security or currency, which will be increased or offset
by the premium received. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, LGT Asset Management will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit a Theme Portfolio to
write another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
Each Theme Portfolio will pay transaction costs in connection with the writing
of options and in entering into closing purchase contracts. Transaction costs
relating to options activity are normally higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Theme Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Theme Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by a Theme Portfolio.
WRITING PUT OPTIONS
Each Theme Portfolio may write put options on securities, indices and
currencies. A put option gives the purchaser of the option the right to sell,
and the writer (seller) the obligation to buy, the underlying security or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
A Theme Portfolio generally would write put options in circumstances where LGT
Asset Management wishes to purchase the underlying security or currency for a
Theme Portfolio's holdings at a price lower than the current market price of the
security or currency. In such event, a Theme Portfolio would write a put option
at an exercise price that, reduced by the premium received on the option,
reflects the lower price it is willing to pay. Since the Theme Portfolio would
also receive interest on debt securities or currencies maintained to cover the
exercise price of the option, this technique could be used to enhance current
return during periods of market uncertainty. The risk in such a transaction
would be that the market price of the underlying security or currency would
decline below the exercise price less the premium received.
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Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
Each Theme Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, a Theme Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American style) or on (European style) the expiration date. A Theme
Portfolio may enter into closing sale transactions with respect to such options,
exercise such option or permit such option to expire.
Each Theme Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Theme Portfolio in order to protect
against an anticipated decline in the value of the security or currency. Such
hedge protection is provided only during the life of the put option when the
Theme Portfolio, as the holder of the put option, is able to sell the underlying
security or currency at the put exercise price regardless of any decline in the
underlying security's market price or currency's exchange value. For example, a
put option may be purchased in order to protect unrealized appreciation of a
security or currency when LGT Asset Management deems it desirable to continue to
hold the security or currency because of tax considerations. The premium paid
for the put option and any transaction costs would reduce any profit otherwise
available for distribution when the security or currency is eventually sold.
A Theme Portfolio may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that Theme Portfolio seeks to benefit from a decline
in the market price of the underlying security or currency. If the put option is
not sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Theme Portfolio will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, the Theme Portfolio would have the
right to purchase the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. A
Theme Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Theme Portfolio for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable a Theme Portfolio to acquire the
security or currency at the exercise price of the call option plus the premium
paid. At times, the net cost of acquiring the security or currency in this
manner may be less than the cost of acquiring the security or currency directly.
This technique may also be useful to a Theme Portfolio in purchasing a large
block of securities that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option, rather than the underlying
security or currency itself, the Theme Portfolio is partially protected from any
unexpected decline in the market price of the underlying security or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
A Theme Portfolio may also purchase call options on underlying securities or
currencies it owns in order to protect unrealized gains on call options
previously written by it. A call option could be purchased for this purpose
where tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at times to
avoid realizing losses that would result in a reduction of the Theme Portfolio's
current return. For example, where a Theme Portfolio has written a call option
on an underlying security or currency having a current market value below the
price at which such security or currency was purchased by that Theme Portfolio,
an increase in the market price could result in the exercise of the call option
written by the Theme Portfolio and the realization of a loss on the underlying
security or currency. Accordingly, the Theme Portfolio could purchase a call
option on the same underlying security or currency, which could be exercised to
fulfill the Theme Portfolio's delivery obligations under its written call (if it
is exercised). This strategy could allow the Theme Portfolio to avoid selling
the portfolio security or currency at a time when it has an unrelaized loss;
however, the Theme Portfolio would have to pay a premium to purchase the call
option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Theme Portfolio's total assets at the time of each purchase.
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A Theme Portfolio may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives the Theme Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or on (European style) the expiration date of the
option. A call option gives the Theme Portfolio as purchaser the right (but not
the obligation) to purchase a specified amount of currency at the exercise price
at any time until (American style) or on (European style) the expiration date of
the option. A Theme Portfolio might purchase a currency put option, for example,
to protect itself against a decline in the dollar value of a currency in which
it holds or anticipates holding securities. If the currency's value should
decline against the dollar, the loss in currency value should be offset, in
whole or in part, by an increase in the value of the put. If the value of the
currency instead should rise against the dollar, any gain to a Theme Portfolio
would be reduced by the premium it had paid for the put option. A currency call
option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which a Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC
options"). Listed options are third-party contracts (I.E., performance of the
obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Theme Portfolio will not purchase an OTC option unless it believes that
daily valuations for such options are readily obtainable. OTC options differ
from exchange-traded options in that OTC options are transacted with dealers
directly and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Theme Portfolio may also sell OTC
options and, in connection therewith, segregate assets or cover its obligations
with respect to OTC options written by the Theme Portfolio. The assets used as
cover for OTC options written by a Theme Portfolio will be considered illiquid
unless the OTC options are sold to qualified dealers who agree that the Theme
Portfolio may repurchase any OTC option it writes at a maximum price to be
calculated by a formula set forth in the option agreement. The cover for an OTC
option written subject to this procedure would be considered illiquid only to
the extent that the maximum repurchase price under the formula exceeds the
intrinsic value of the option.
A Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. A Theme
Portfolio intends to purchase or write only those exchange-traded options for
which there appears to be a liquid secondary market. However, there can be no
assurance that such a market will exist at any particular time. Closing
transactions can be made for OTC options only by negotiating directly with the
contra party, or by a transaction in the secondary market if any such market
exists. Although a Theme Portfolio will enter into OTC options only with contra
parties that are expected to be capable of entering into closing transactions
with the Theme Portfolio, there is no assurance that the Theme Portfolio will in
fact be able to close out an OTC option position at a favorable price prior to
expiration. In the event of insolvency of the contra party, the Theme Portfolio
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Theme Portfolio writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Theme Portfolio an amount of cash if the closing level of the index upon
which the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Theme Portfolio buys a call on an index, it pays a premium
and has the same rights as to such call as are indicated above. When a Theme
Portfolio buys a put on an index, it pays a premium and has the right, prior to
the expiration date, to require the seller of the put, upon the Theme
Portfolio's exercise of the put, to deliver to the Theme Portfolio an amount of
cash if the closing level of the index upon which the put is based is less than
the exercise price of the put, which amount of cash is determined by the
multiplier, as described above for calls. When a Theme Portfolio writes a put on
an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Theme Portfolio to deliver to it an amount of
cash
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equal to the difference between the closing level of the index and the exercise
price times the multiplier, if the closing level is less than the exercise
price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Theme Portfolio
writes a call on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. A
Theme Portfolio can offset some of the risk of writing a call index option
position by holding a diversified portfolio of securities similar to those on
which the underlying index is based. However, a Theme Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Theme Portfolio, as the call
writer, will not know that it has been assigned until the next business day at
the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Theme Portfolio has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Theme Portfolio will be required
to pay the difference between the closing index value and the exercise price of
the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio may enter into interest rate or currency futures contracts,
and may enter into stock index futures contracts (collectively, "Futures" or
"Futures Contracts"), as a hedge against changes in prevailing levels of
interest rates, currency exchange rates or stock price levels in order to
establish more definitely the effective return on securities or currencies held
or intended to be acquired by the Theme Portfolio. A Theme Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates, and decreases in currency exchange rates and stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates, and increases in currency exchange rates or stock
prices.
Each Theme Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument thereon in the United States. Futures exchanges and trading
thereon in the United States are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"). Futures are exchanged in
London at the London International Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Theme Portfolio's exposure to interest rate, currency exchange
rate and stock market fluctuations, that Theme Portfolio may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is
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effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Theme Portfolio realizes a gain;
if it is more, the Theme Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Theme
Portfolio realizes a gain; if it is less, the Theme Portfolio realizes a loss.
The transaction costs must also be included in these calculations. There can be
no assurance, however, that a Theme Portfolio will be able to enter into an
offsetting transaction with respect to a particular Futures Contract at a
particular time. If a Theme Portfolio is not able to enter into an offsetting
transaction, that Theme Portfolio will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Theme
Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging
purposes; that is, Futures Contracts will be sold to protect against a decline
in the price of securities or currencies that a Theme Portfolio owns, or Futures
Contracts will be purchased to protect the Theme Portfolio against an increase
in the price of securities or currencies it has committed to purchase or expects
to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Theme Portfolio in order to initiate Futures trading and maintain
the Theme Portfolio's open positions in Futures Contracts. A margin deposit made
when the Futures Contract is entered into ("initial margin") is intended to
ensure the Theme Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin" to and from the futures
commission merchant through which the Theme Portfolio entered in the Futures
Contract will be made on a daily basis as the price of the underlying security,
currency or index fluctuates making the Futures Contract more or less valuable,
a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Theme Portfolio's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
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If a Theme Protfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date
suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing on an
option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Theme Portfolio enters into Futures Contracts, options on
Futures Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Theme Portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Theme
Portfolio has entered into. In general, a call option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors and the Portfolios' Board of Trustees, as applicable, without
a shareholder vote. This limitation does not limit the percentage of a Theme
Portfolio's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Theme Portfolio
either may
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GT GLOBAL THEME FUNDS
accept or make delivery of the currency at the maturity of the Forward Contract.
A Theme Portfolio may also, if its contra party agrees, prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
contract.
A Theme Portfolio engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. A Theme Portfolio
might sell a particular foreign currency forward, for example, when it holds
bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Theme Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, a Theme
Portfolio might purchase a currency forward to "lock in" the price of securities
denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Theme Portfolio will enter into such Forward
Contracts with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Portfolios' Board of Trustees or the
Company's Board of Directors, as applicable.
A Theme Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to overall investments of that Theme
Portfolio. The precise matching of the Forward Contract amounts and the value of
specific securities generally will not be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the Forward Contract
is entered into and the date it matures. Accordingly, it may be necessary for
that Theme Portfolio to purchase additional foreign currency on the spot (I.E.,
cash) market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Theme Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency the Theme Portfolio is obligated to
deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing a Theme Portfolio to sustain
losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Theme Portfolio to
sell a currency, that Theme Portfolio either may sell a security and use the
sale proceeds to make delivery of the currency or retain the security and offset
its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Theme Portfolio will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver.
Similarly, a Theme Portfolio may close out a Forward Contract requiring it to
purchase a specified currency by, if its contra party agrees, entering into a
second contract entitling it to sell the same amount of the same currency on the
maturity date of the first contract. A Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to a Theme Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities a Theme Portfolio owns or intends to acquire, but it does
establish a rate of exchange in advance. In addition, while Forward Contract
sales limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Theme Portfolio may use options on foreign currencies, Futures on foreign
currencies, options on Futures on foreign currencies and Forward Contracts, to
hedge against movements in the values of the foreign currencies in which the
Theme Portfolio's securities are denominated. Such currency hedges can protect
against price movements in a security that the Theme Portfolio owns or intends
to acquire that are attributable to changes in the value of the currency in
which it is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
A Theme Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Theme Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which LGT Asset Management
believes will have a
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positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Theme Portfolio could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Theme Portfolio might be required to accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Theme Portfolio has purchased) expose the Theme Portfolio to an
obligation to another party. A Theme Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, Forward Contracts or Future Contracts,
or (2) cash, receivables and short-term debt securities with a value sufficient
at all times to cover its potential obligations not covered as provided in (1)
above. Each Theme Portfolio will comply with SEC guidelines regarding cover for
these instruments and, if the guidelines so require, set aside cash, U.S.
government securities or other liquid, high-grade debt securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Theme Portfolio's assets is used for cover or otherwise set aside, it could
affect portfolio management or the Theme Portfolio's ability to meet redemption
requests or other current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES. Each Theme Portfolio may invest up to 15% of its net
assets (except for the Health Care Fund, which may invest up to 10% of its total
assets) in illiquid securities. Securities may be considered illiquid if a Theme
Portfolio cannot reasonably expect within seven days to sell the security for
approximately the amount at which that Theme Portfolio values such securities.
See "Investment Limitations." The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than will the sale of
liquid securities such as securities eligible for trading on U.S. securities
exchanges or in OTC markets. Moreover, restricted securities, which may be
illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell
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and the time the Theme Portfolio may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the Theme Portfolio might obtain a less favorable
price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, has the ultimate
responsibility for determining whether specific securities, including restricted
securities pursuant to Rule 144A under the 1933 Act, are liquid or illiquid.
Each Board has delegated the function of making day-to-day determinations of
liquidity to LGT Asset Management, in accordance with procedures approved by
that Board. LGT Asset Management takes into account a number of factors in
reaching liquidity decisions, including, but not limited to, (i) the frequency
of trading in the security; (ii) the number of dealers that make quotes for the
security; (iii) the number of dealers that have undertaken to make a market in
the security; (iv) the number of other potential purchasers; and (v) the nature
of the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). LGT Asset
Management monitors the liquidity of securities held by each Theme Portfolio and
periodically reports such determinations to the Portfolios' Board of Trustees or
the Company's Board of Directors, as applicable.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Theme Portfolio could lose its entire investment
in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Theme Portfolio may invest may have groups that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Theme Portfolio's
investment in those countries. Instability may also result from, among other
things; (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extraconstitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Theme
Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Theme Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expenses of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by
Statement of Additional Information Page 15
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GT GLOBAL THEME FUNDS
foreign investors. In addition, if there is a deteriation in a country's balance
of payments of for other reasons, a country may impose restrictions on foreign
capital remittances abroad. A Theme Portfolio could be adversely affected by
delays in, or a refusal to grant, any required governmental approval for
repatriation, as well as by the application to it of other restrictions on
investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by a Theme Portfolio
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning most foreign issuers of
securities held by a Theme Portfolio than is available concerning U.S. issuers.
In instances where the financial statements of an issuer are not deemed to
reflect accurately the financial situation of the issuer, LGT Asset Management
will take appropriate steps to evaluate the proposed investment, which may
include on-site inspection of the issuer, interviews with its management and
consultations with accountants, bankers and other specialists. There is
substantially less publicly available information about foreign companies than
there are reports and ratings published about U.S. companies and the U.S.
government. In addition, where public information is available, it may be less
reliable than such information regarding U.S. issuers. Issuers of securities in
foreign jurisdictions are generally not subject to the same degree of regulation
as are U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because each Theme Portfolio, under normal
circumstances, will invest a substantial portion of its total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of a Theme Portfolio's investment performance. A decline in the
value of any particular currency against the U.S. dollar will cause a decline in
the U.S. dollar value of that Theme Portfolio's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the appropriate Fund's net asset value and any net investment income and capital
gains derived from such securities to be distributed in U.S. dollars to
shareholders of that Fund. Moreover, if the value of the foreign currencies in
which a Theme Portfolio receives its income falls relative to the U.S. dollar
between receipt of the income and the making of Fund distributions, the Theme
Portfolio may be required to liquidate securities in order to make distributions
if the Theme Portfolio has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and the pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars,
the Portfolios do not intend to convert their holdings of foreign currencies
into U.S. dollars on a daily basis. Each Portfolio will do so, from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to sell the currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of a Theme Portfolio
are uninvested and no return is earned thereon. The inability of a Theme
Portfolio to make intended security purchases due to settlement problems could
cause that Theme Portfolio to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to that Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Theme Portfolio has entered into a
contract to sell the security, could result in possible liability to the
purchaser. LGT Asset Management will consider such difficulties when determining
the allocation of a Theme Portfolio's assets, although LGT Asset Management does
not believe that such difficulties will have a material adverse effect on a
Theme Portfolio's portfolio trading activities.
Statement of Additional Information Page 16
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GT GLOBAL THEME FUNDS
Each Theme Portfolio may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards
concerning that Theme Portfolio's investments; and possible difficulties in
obtaining and enforcing judgments against such custodians.
WITHHOLDING TAXES. Each Theme Portfolio's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that Theme Portfolio's net investment income or delaying the
receipt of income where those taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EUROPE. The countries that are members of
the European Economic Community ("Common Market") (Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and
the United Kingdom) eliminated certain import tariffs and quotas and other trade
barriers with respect to one another over the past several years. LGT Asset
Management believes that this deregulation should improve the prospects for
economic growth in many European countries. Among other things, the deregulation
could enable companies domiciled in one country to avail themselves of lower
labor costs existing in other countries. In addition, this deregulation could
benefit companies domiciled in one country by opening additional markets for
their goods and services in other countries. Since, however, it is not clear
what the exact form or effect of these Common Market reforms will be on business
in Western Europe or the emerging European markets, it is impossible to predict
the long-term impact of the implementation of these programs on the securities
owned by a Theme Portfolio.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by a Theme Portfolio in Japan means that that Portfolio may be more
volatile than a fund that is broadly diversified geographically. Overseas trade
is important to Japan's economy. Japan has few natural resources and must export
to pay for its imports of these basic requirements. Because of the concentration
of Japanese exports in highly visible products, Japan has had difficult
relations with its trading partners, particularly the United States, where the
trade imbalance is the greatest. It is possible that trade sanctions or other
protectionist measures could impact Japan adversely in both the short and the
long term. The Japanese securities markets are less regulated than those in the
United States. Evidence has emerged from time to time of distortion of market
prices to serve political or other purposes. Shareholders' rights are not always
equally enforced.
Hong Kong is a British colony which will transfer sovereignty to the Peoples
Republic of China in 1997. China has espoused policies antagonistic to free
enterprise capitalism and democracy. There can be no guarantee that property
rights will continue to be safeguarded in Hong Kong after 1997, although
recently China has moved toward free enterprise, and has established stock
exchanges of its own.
SPECIAL CONSIDERATIONS AFFECTIVE EMERGING MARKETS. Investing in the
securities of companies in emerging markets, including the markets of Latin
America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may
entail special risks relating to potential political and economic instability
and the risks of expropriation, nationalization, confiscation or the imposition
of restrictions on foreign investment, convertibility of currencies into U.S.
dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, a Theme
Portfolio could lose its entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading volume in issuers compared to
the volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economics and securities
markets of certain Latin American countries.
DIVERSIFICATION REQUIREMENTS UNDER INTERNAL REVENUE CODE. The investment
flexibility of each Theme Portfolio may be restricted by the necessity of
satisfying certain diversification requirements in order to maintain the
qualification of the Theme Portfolio as a regulated investment company within
the meaning of the Internal Revenue Code of 1986, as amended (the "Code").
Statement of Additional Information Page 17
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GT GLOBAL THEME FUNDS
INVESTMENT LIMITATIONS
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FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each has the following fundamental
investment policy to enable it to invest in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental policies, of
each Feeder Fund and its corresponding Portfolio are identical. Therefore,
although the following discusses the investment policies of each Portfolio and
its Board of Trustees, it applies equally to each Feeder Fund and its Board of
Directors.
Each Portfolio has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of that Portfolio's shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. Whenever a Feeder
Fund is requested to vote on a change in the investment limitations of its
corresponding Portfolio, that Fund will hold a meeting of its shareholders and
will cast its votes as instructed by its shareholders.
Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, each Portfolio may invest in debt securities secured
by real estate or interests therein or issued by companies which invest in
real estate or interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each
Portfolio may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that
the disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the Securities Act
of 1933;
(4) Make loans, except that each Portfolio may purchase debt securities
and enter into repurchase agreements and may make loans of portfolio
securities;
(5) Purchase securities on margin, provided that each Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities; except that it may make margin deposits
in connection with futures contracts;
(6) Borrow money except from banks not in excess of 33 1/3 of the value
of each Portfolio's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent any Portfolio from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Portfolio may not exceed one-third
of that Portfolio's total assets. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Prospectus and Statement of Additional Information, and
collateral arrangements relating thereto will not be deemed to be
borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Portfolio may invest in
the securities of companies that engage in these activities.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL THEME FUNDS
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolios' outstanding voting securities as defined above and in the
Prospectus.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Portfolio, the Portfolio's investment adviser,
or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer;
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contract the
Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make any
additional investments); and
(8) Invest more than 10% of its total assets in shares of other
investment companies and may not invest more than 5% of its total assets in
any one investment company or acquire more than 3% of the outstanding voting
securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies which (unless otherwise noted) may not be changed without
approval by the affirmative vote of the lesser of (i) 67% of the Health Care
Fund's shares represented at a meeting at which more than 50% of the outstanding
shares are represented, or (ii) more than 50% of the outstanding shares.
The Health Care Fund may not:
(1) Invest more than 10% of its total assets in securities which cannot
be readily resold to the public because of legal or contractual restrictions
or for which no readily available market exists, which for this purpose
includes repurchase agreements maturing in more than seven days;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or sell real estate; provided that the Health Care Fund may
invest in securities secured by real estate or interests therein or issued
by companies that invest in real estate or interests therein;
(4) Purchase securities on margin or make short sales, except for
short-term credits necessary for clearance of portfolio transactions, and
except that the Health Care Fund may make short sales and maintain short
positions and may make margin deposits in connection with its use of
options, futures contracts and options on futures contracts;
Statement of Additional Information Page 19
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GT GLOBAL THEME FUNDS
(5) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Health Care
Fund may be deemed to be an underwriter under federal securities laws;
(6) Make loans, except through loans of portfolio securities as
authorized by the Health Care Fund's Prospectus and except through
repurchase agreements, provided that for purposes of this limitation the
acquisition of portfolio securities consistent with the Health Care Fund's
investment objective and policies shall not be deemed to be the making of a
loan;
(7) Purchase or sell commodities or commodity contracts, except that
consistent with the Health Care Fund's investment objective and policies the
Health Care Fund may use financial and currency futures instruments and
options thereon for hedging purposes;
(8) Issue senior securities, except that for purposes of this limitation
the Health Care Fund may borrow money in such amounts and in such fashion as
is permitted under the 1940 Act and the rules thereunder;
(9) Mortgage, pledge or hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by the Health Care
Fund, except as may be necessary in connection with permitted borrowings;
provided, however, that this does not prohibit escrow, collateral or margin
arrangements in connection with the Health Care Fund's use of options,
futures contracts and options on futures contracts;
(10) Invest in oil, gas or mineral-related programs or leases; or
(11) Purchase any security if as a result more than 5% of the Health Care
Fund's total assets would be invested in securities of companies which
together with any predecessors have been in operation for less than three
years.
An additional investment policy of the Health Care Fund, which may be changed by
vote of the Company's Board of Directors without shareholder approval, provides
that the Health Care Fund will not invest in securities of an issuer if the
investment would cause the Health Care Fund to own more than 10% of any class of
securities of any one issuer. Although it intends to do so only infrequently, if
at all, the Health Care Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies. The Health Care Fund may not
invest more than 5% of its total assets in any one investment company or acquire
more than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Health Care Fund's investment objective, which may not be changed without
the approval of its shareholders, and other investment policies, techniques and
limitations, which may be changed without shareholder approval.
TELECOMMUNICATIONS FUND
The Telecommunications Fund has adopted the following investment limitations as
fundamental policies which (unless otherwise noted) may not be changed without
approval by the affirmative vote of the lesser of (i) 67% of the
Telecommunications Fund's shares represented at a meeting at which more than 50%
of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares.
The Telecommunications Fund may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, the Telecommunications Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts;
(2) Purchase or sell commodities or commodity contracts, except that the
Telecommunications Fund may purchase and sell financial and currency futures
contracts and options thereon, and may purchase and sell currency forward
contracts, options on foreign currencies and may otherwise engage in other
transactions in foreign currencies;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposition of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(4) Make loans, except that the Telecommunications Fund may purchase
debt securities and enter into repurchase agreements and may make loans of
portfolio securities;
Statement of Additional Information Page 20
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GT GLOBAL THEME FUNDS
(5) Purchase securities on margin, provided that the Telecommunications
Fund may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities; except that it may make
margin deposits in connection with futures contracts;
(6) Borrow money except from banks not in excess of 33 1/3% of the value
of the Telecommunications Fund's total assets, including the amount
borrowed, less all liabilities and indebtedness (other than the borrowing).
This restriction shall not prevent the Telecommunications Fund from entering
into reverse repurchase agreements, provided that reverse repurchase
agreements, and any other transactions constituting borrowing by the
Telecommunications Fund may not exceed one-third of the Telecommunications
Fund's total assets. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, as described in
the Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Telecommunications Fund
may invest in the securities of companies that engage in these activities.
In addition, the Telecommunications Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act which means
that, with respect to 75% of the Telecommunications Fund's total assets, no more
than 5% will be invested in the securities of any one issuer, and the
Telecommunications Fund will purchase no more than 10% of the outstanding voting
securities of any one issuer. This policy cannot be changed without approval by
the holders of a majority of the Telecommunications Fund's outstanding voting
securities as defined above and in the Prospectus.
The following operating policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Directors without shareholder approval. The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications Fund to own more than 10% of any class of securities of
any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Telecommunications Fund's
investment adviser, or distributor, each owning beneficially more than 1/2
of 1% of the securities of such issuer, together own more than 5% of the
securities of such issuer;
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Telecommunications
Fund's total assets. While borrowings exceed 5% of the Telecommunications
Fund's total assets, the Telecommunications Fund will not make any
additional investments.
The Telecommunications Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies, and in real estate investment
trusts. The Telecommunications Fund may not invest more than 5% of its total
assets in any one investment company or acquire more than 3% of the outstanding
voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Telecommunications Fund's investment objective, which may not be changed
without the approval of shareholders, and other investment policies, techniques
and limitations, which may be changed without shareholder approval.
Statement of Additional Information Page 21
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GT GLOBAL THEME FUNDS
------------------------
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
Portfolio's compliance with the investment percentage limitations referred to
above and in the Prospectus.
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EXECUTION OF PORTFOLIO
TRANSACTIONS
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Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, LGT Asset Management is responsible for the
execution of each Theme Portfolio's securities transactions and the selection of
broker/ dealers who execute such transactions on behalf of each Theme Portfolio.
In executing portfolio transactions, LGT Asset Management seeks the best net
results for each Theme Portfolio, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
Although LGT Asset Management generally seeks reasonably competitive commission
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While each Theme Portfolio may engage in
soft dollar arrangements for research services, as described below, each Theme
Portfolio has no obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Consistent with the interests of each Theme Portfolio, LGT Asset Management may
select broker/dealers to execute that Theme Portfolio's portfolio transaction on
the basis of the research and brokerage services they provide to LGT Asset
Management for its use in managing that Theme Portfolio and its other advisory
accounts. Such services may include furnishing analyses, reports and information
concerning issuers, industries, securities, geographic regions, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
broker is in addition to, and not in lieu of, the services required to be
performed by LGT Asset Management under the applicable Investment Management and
Administration Contract (defined below). A commission paid to such broker may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that LGT Asset Management determines in good
faith that such commission is reasonable in terms either of that particular
transaction or the overall responsibility of LGT Asset Management to that Theme
Portfolio and its other clients and that the total commissions paid by the Theme
Portfolio will be reasonable in relation to the benefits received by that Theme
Portfolio over the long term. Research services may also be received from
dealers who execute Theme Portfolio transactions in over-the-counter markets.
LGT Asset Management may allocate brokerage transactions to broker/dealers who
have entered into arrangements under which the broker/dealer allocates a portion
of the commissions paid by a Theme Portfolio toward payment of that Theme
Portfolio's expenses, such as custodian fees.
Investment decisions for a Theme Portfolio and for other investment accounts
managed by LGT Asset Management are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts, including a Theme Portfolio. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Theme Portfolio is
concerned, in other cases LGT Asset Management believes that coordination and
the ability to participate in volume transactions will be beneficial to that
Theme Portfolio.
Under a policy adopted by the Company's Board of Directors and the Portfolios'
Board of Trustees, and subject to the policy of obtaining the best net results,
LGT Asset Management may consider a broker/dealer's sale of the shares of the
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL THEME FUNDS
Funds and the other portfolios for which LGT Asset Management serves as
investment manager or administrator in selecting broker/dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Funds and such other portfolios.
Each Theme Portfolio contemplates purchasing most foreign equity securities in
OTC markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Theme Portfolio in the form of ADRs,
ADSs, EDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs and CDRs may be listed on stock exchanges, or traded in the
over-the-counter markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which a Theme Portfolio may invest are generally traded in
the over-the-counter markets.
A Theme Portfolio does not have any obligation to deal with any broker/dealer or
group of broker/dealers in the execution of securities transactions. Each Theme
Portfolio contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are members of Liechtenstein Global Trust. The Company's Board of Directors
or the Portfolios' Board of Trustees, as applicable, has adopted procedures in
conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to such affiliates are reasonable and fair in the context of
the market in which they are operating. Any such transactions will be effected
and related compensation paid only in accordance with applicable SEC
regulations.
For the fiscal years ended October 31, 1995, 1994, and 1993, the Health Care
Fund paid aggregate brokerage commissions of $545,743, $480,241, and $665,620,
respectively. For the fiscal years ended October 31, 1995, 1994 and 1993, the
Telecommunications Fund paid aggregate brokerage commissions of $2,253,982,
$5,674,965, and $2,051,270, respectively. For the fiscal October 31, 1995, the
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio paid aggregate brokerage commissions of $38,814, $122,399 and $98,462,
respectively. For the fiscal period May 31, 1994 (commencement of operations) to
October 31, 1994, the Financial Services Portfolio, Infrastructure Portfolio and
Natural Resources Portfolio paid aggregate brokerage commissions of $18,145,
$111,512 and $132,572, respectively. For the fiscal period December 30, 1994
(commencement of operations) to October 31, 1995, the Consumer Products and
Services Portfolio paid aggregate brokerage commissions of $17,605.
THEME PORTFOLIO TRADING AND TURNOVER
Although each Theme Portfolio does not intend generally to trade for short-term
profits, the securities held by that Theme Portfolio will be sold whenever
management believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. Portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Theme Portfolio's average month-end portfolio value, excluding
short-term investments. For purposes of this calculation, portfolio securities
exclude purchases and sales of debt securities having a maturity at the date of
purchase of one year or less. The portfolio turnover rate will not be a limiting
factor when management deems portfolio changes appropriate. Higher portfolio
turnover involves correspondingly greater brokerage commissions and other
transaction costs that the Theme Portfolio will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to each
Fund's shareholders. For the fiscal years ended October 31, 1995 and 1994, the
Telecommunications Fund's portfolio turnover rates were 62% and 57%,
respectively. For the fiscal years ended October 31, 1995 and 1994, the Health
Care Fund's portfolio turnover rates were 99% and 64%, respectively. For the
fiscal year ended October 31, 1995, the portfolio turnover rates for the
Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio were 170%, 45%, and 87%, respectively. For the fiscal period May 31,
1994 (commencement of operations) to October 31, 1994, the portfolio turnover
rates for the Financial Services Portfolio, Infrastructure Portfolio and Natural
Resources Portfolio were 53%, 18% and 137%, respectively. For the fiscal period
December 30, 1994 (commencement of operations) to October 31, 1995, the
portfolio turnover rate for the Consumer Products and Services Portfolio was
240%.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL THEME FUNDS
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers and the Portfolios' Trustees and
Executive Officers are listed below. The term "Directors" as used below refers
to the Company's Directors and the Portfolios' Trustees collectively.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Director of Liechtenstein Global Trust Limited (holding company of the various
Director, Chairman of the Board and international LGT companies) since 1990; President of the Asset Management Division,
President Liechtenstein Global Trust Limited, since 1995; Director and President of LGT Asset
50 California Street Management Holdings, Inc. ("LGT Asset Management Holdings") since 1988; Director and
San Francisco, CA 94111 President of LGT Asset Management since 1989; Director of GT Global since 1987; President
of GT Global from 1987 to 1995; Director of GT Services since 1990; President of GT
Services from 1990 to 1995; Director of G.T. Global Insurance Agency, Inc. ("G.T.
Insurance") since 1992; and President of G.T. Insurance from 1992 to 1995. Mr. Minella
also is a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by LGT Asset Management.
C. Derek Anderson, 54 Chief Executive Officer of Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer of Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.;
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by LGT Asset Management.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm); Director and Chairman of C.D. Stimson
Director Company (a private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also
Two Embarcadero Center is a director or trustee of each of the other investment companies registered under the
San Francisco, CA 94111 1940 Act that is managed or administered by LGT Asset Management.
Arthur C. Patterson, 51 Managing Partner of Accel Partners (a venture capital firm). He also serves as a director
Director of various computing and software companies. Mr. Patterson also is a director or trustee
One Embarcadero Center of each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by LGT Asset Management.
San Francisco, CA 94111
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Miss Quigley was President of Quigley Friedlander &
Director Co., Inc. (a financial advisory services firm). Ms. Quigley also is a director or trustee
1055 California Street of each of the other investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94108 administered by LGT Asset Management.
F. Christian Wignall, 39 Director of LGT Asset Management Holdings since 1989, Senior Vice President, Chief
Vice President and Chief Investment Investment Officer - Global Equities and a Director of LGT Asset Management since 1987,
Officer - and Chairman of the Investment Policy Committee of the affiliated international LGT
Global Equities companies since 1990.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 37 President of GT Services since 1995; from 1994 to 1995 Senior Vice
Senior Vice President and President -- Finance and Administration of GT Global, GT Services and
Chief Financial Officer G.T. Insurance. Senior Vice President -- Finance and Administration of
50 California Street LGT Asset Management Holdings and LGT Asset Management since 1994. From
San Francisco, CA 94111 1990 to 1994, Mr. Tufts was Vice President -- Finance of LGT Asset
Management Holdings, LGT Asset Management, GT Global and GT Services. He
was Vice President -- Finance of GT Insurance from 1992 to 1994; and a
Director of LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 50 Vice President -- Mutual Fund Accounting at of LGT Asset Management
Vice President and Principal since 1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust
Accounting Officer Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 49 Senior Vice President, General Counsel and Secretary of LGT Asset
Vice President and Secretary Management Holdings, LGT Asset Management, GT Global, GT Services and
50 California Street G.T. Insurance since February, 1996. Senior Vice President, Secretary
San Francisco, CA 94111 and General Counsel of LGT Asset Management Holdings, LGT Asset
Management, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996. Mr. Lee was the Senior Vice President, General Counsel
and Secretary of Strong/Corneliuson Management, Inc. and Secretary of
each of the Strong Funds from October, 1991 through May, 1994. For more
than five years prior to October, 1991, he was a shareholder in the law
firm of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
Peter R. Guarino, 36 Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Assistant Secretary Global, GT Services and G.T. Insurance since February 1996. Mr. Guarino
50 California Street has been an Assistant General Counsel of LGT Asset Management, GT Global
San Francisco, CA 94111 and GT Services since 1991, and Assistant General Counsel of G.T.
Insurance since 1992. From 1989 to 1991, Mr. Guarino was an attorney at
The Dreyfus Corporation.
David J. Thelander, 40 Vice President of LGT Asset Management Holdings, LGT Asset Management,
Assistant Secretary GT Global, GT Services and G.T. Insurance since February, 1996.
50 California Street Assistant General Counsel of LGT Asset Management since January 1995.
San Francisco, CA 94111 From 1993 to 1994, Mr. Thelander was an associate at Kirkpatrick &
Lockhart LLP (a law firm). Prior thereto, he was an attorney with the
U.S. Securities and Exchange Commission.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Ms.
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors of the
Company. Each of the Directors and Officers of the Company is also a Director
and Officer of G.T. Global Developing Markets Fund, Inc., and a Trustee and
Officer of G.T. Global Growth Series, G.T. Greater Europe Fund, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series, Global
Investment Portfolio (of which the Portfolios are subtrusts), and Global High
Income Portfolio, which also are registered investment companies managed by LGT
Asset Management. Each Director and Officer serves in total as a Director and or
Trustee and officer, respectively of 10 registered investment companies with 40
series managed or administrated by LGT Asset Management. The Company pays each
Director who is not a director, officer or employee of LGT Asset Management or
any affiliated company $5,000 a year, plus $300 per Fund for each meeting of the
Board attended by the Director, and reimburses travel and other expenses
incurred in connection with attending Board meetings. Other Directors and
Officers receive no compensation or expense reimbursement from the Company. For
the fiscal year ended October 31, 1995, Mr. Anderson, Mr. Bayley, Mr. Patterson
and Ms. Quigley, who are not directors, officers or employees of LGT Asset
Management or any affiliated company, received total compensation of $36,705,
$34,230, $36,755 and $33,706, respectively, from the Company for their services
as Directors. For the fiscal year ended October 31, 1995, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley who are not directors, officers or
employees of
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL THEME FUNDS
LGT Asset Management or any affiliated company, received total compensation of
$92,177, $87,869, $92,261 and $86,958, respectively, from the 40 investment
companies managed or administered by LGT Asset Management for which he or she
serves as a Director or Trustee. Fees and expenses disbursed to the Directors
contained no exercised or payable pension or retirement benefits. As of February
22, 1996, the Officers and Directors and their families as a group owned in the
aggregate beneficially or of record less than 1% of the outstanding shares of
each Fund or of all the Company's funds in the aggregate, with the exception of
the Financial Services Fund and the Consumer Products and Services Fund. As of
February 22, 1996, the Officers and Directors and their families or a group
owned in the aggregate beneficially or of record 1.05% of the outstanding shares
of the Financial Services Fund and 9.85% of the Consumer Products and Services
Fund.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
LGT Asset Management serves as each Portfolio's investment manager and
administrator under an Investment Management and Administration Contract between
each Portfolio and LGT Asset Management ("Portfolio Management Contract") LGT
Asset Management serves as administrator to each Feeder Fund under an
administration contract between the Company and LGT Asset Management
("Administration Contract"). The Administration Contract will not be deemed an
advisory contract, as defined under the 1940 Act. As investment manager and
administrator, LGT Asset Management makes all investment decisions for each
Portfolio and, as administrator, administers each Portfolio's and each Feeder
Fund's affairs. Among other things, LGT Asset Management furnishes the services
and pays the compensation and travel expenses of persons who perform the
executive, administrative, clerical and bookkeeping functions of each Portfolio
and each Feeder Fund and provides suitable office space, necessary small office
equipment and utilities. For these services, each Feeder Fund pays
administration fees, computed daily and paid monthly, to LGT Asset Management at
the annualized rate of 0.25% of the Fund's average daily net assets. In
addition, each Feeder Fund bears a pro rata portion of the investment management
and administration fee paid by its corresponding Portfolio to LGT Asset
Management. Each Portfolio pays such fees based on its average daily net assets,
also computed daily and paid monthly, at the annualized rate of 0.725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million, and .65% on all amounts thereafter.
The Portfolio Management Contract may be renewed with respect to Portfolio for
additional one-year terms, provided that any such renewal has been specifically
approved at least annually by (i) the Portfolios' Board of Trustees or the vote
of a majority of the Portfolio's outstanding voting securities (as defined in
the 1940 Act) and (ii) a majority of Trustees who are not parties to the
Portfolio Management Contract or "interested persons" of any such party (as
defined in the 1940 Act), cast in person at a meeting called for the specific
purpose of voting on such approval. The Portfolio Management Contract provides
that with respect to each Portfolio, and the Administration Contract provides
that with respect to each Feeder Fund, either the Company, each Portfolio or LGT
Asset Management may terminate the Contract without penalty upon sixty days'
written notice to the other party. The Portfolio Management Contract terminates
automatically in the event of its assignment (as defined in the 1940 Act).
Under the Portfolio Management Contract, LGT Asset Management has agreed to
reduce the investment management and administration fees payable by each
Portfolio by the amount that the ordinary operating expenses (exclusive of
brokerage commissions, organization expenses, interest, taxes,
distribution-related expenses, certain expenses attributable to investing
outside the United States and extraordinary expenses) of that Portfolio for any
fiscal year borne by its corresponding Fund, together with the direct ordinary
operating expenses (exclusive of brokerage commission, organization expenses,
taxes, interest, certain distribution-related expenses and extraordinary
expenses) of such Fund, exceeds the most stringent limits prescribed by any
state in which the shares of the Fund are offered for sale. Currently, the most
restrictive applicable limitation provides that a Feeder Fund's expenses may not
exceed an annual rate of 2 1/2% of the first $30 million of average net assets,
2% of the next $70 million of average net assets and 1 1/2% of all average net
assets thereafter. LGT Asset Management and GT Global have voluntarily
undertaken to limit each Feeder Fund's expenses (exclusive of brokerage
commissions, interest, taxes and extraordinary expenses) to the maximum annual
level of 1.90% of
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL THEME FUNDS
the average daily net assets of the Fund's Advisor Class shares during each
fiscal year, and LGT Asset Management has agreed to reimburse each Feeder Fund
if its expenses exceed that amount.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
LGT Asset Management serves as the investment manager and administrator to the
Health Care Fund and Telecommunications Fund under an Investment Management and
Administration Contract ("Management Contract") between the Company and LGT
Asset Management. As investment manager and administrator, LGT Asset Management
makes all investment decisions for the Health Care Fund and Telecommunications
Fund and administers the Health Care Fund and Telecommunications Fund's affairs.
Among other things, LGT Asset Management furnishes the services and pays the
compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Company and the Health
Care Fund and Telecommunications Fund, and provides suitable office space,
necessary small office equipment and utilities. For these services, the Health
Care Fund and Telecommunications Fund each pays LGT Asset Management investment
management and administration fees, based on the Health Care Fund's and
Telecommunications Fund's average daily net assets, computed daily and paid
monthly, at the annualized rate of .975% on the first $500 million, .95% on the
next $500 million, .925% on the next $500 million, and .90% on all amounts
thereafter.
The Management Contract may be renewed for additional one-year terms with
respect to the Health Care Fund and Telecommunications Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Health Care
Fund and Telecommunications Fund's outstanding voting securities (as defined in
the 1940 Act), and (ii) a majority of Directors who are not parties to the
Management Contract or "interested persons" of any such party (as defined in the
1940 Act), cast in person at a meeting called for the specific purpose of voting
on such approval. The Management Contract provides that with respect to the
Health Care Fund and Telecommunications Fund either the Company or LGT Asset
Management may terminate the Contract without penalty upon sixty (60) days'
written notice to the other party. The Management Contract terminates
automatically in the event of its assignment (as defined in the 1940 Act).
Under the Management Contract, LGT Asset Management has agreed to waive its
investment management and administration fees from the Health Care Fund and
Telecommunications Fund and to reimburse the Health Care Fund's and
Telecommunications Fund to the extent necessary to assure that the Health Care
Fund's and Telecommunications Fund's annual expenses (exclusive of brokerage
commissions, organizational expenses, taxes, interest, distribution-related
expenses, certain expenses attributable to investing outside the United States
and extraordinary expenses) do not exceed the most stringent expense limitations
prescribed by any state in which the Health Care Fund and Telecommunications
Fund's shares are offered for sale. Currently, the most restrictive applicable
limitation provides that the Health Care Fund and Telecommunications Fund's
expenses may not exceed an annual rate of 2 1/2% of the first $30 million of
average net assets, 2% of the next $70 million of average net assets and 1 1/2%
of assets in excess of that amount. In addition, GT Global and LGT Asset
Management have voluntarily undertaken to limit the Health Care Fund's and
Telecommunications Fund's Advisor Class expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual level of
1.90% of the average daily net assets of each Fund's Advisor Class shares,
respectively, during each fiscal year, and LGT Asset Management has agreed to
reimburse the Health Care Fund and Telecommunications Fund if the Health Care
Fund's and Telecommunications Fund's expenses exceed that amount.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL THEME FUNDS
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to LGT Asset Management during
the periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1995...................................................................................................... $ 4,453,857
1994...................................................................................................... 4,353,688
1993...................................................................................................... 5,331,224
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1995...................................................................................................... $ 23,861,460
1994...................................................................................................... 21,926,187
1993...................................................................................................... 7,254,611
1992 (since Fund inception on January 27, 1992)........................................................... 2,624,818
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
1995...................................................................................................... $ 51,353
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 8,249
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
1995...................................................................................................... $ 601,421
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 51,922
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
1995...................................................................................................... $ 213,856
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 28,500
</TABLE>
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
December 30, 1994 (commencement of operations) to October 31, 1995........................................ $ 16,284
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, and for the fiscal year ended October 31, 1995, LGT Asset Management
reimbursed the Financial Services Portfolio, Infrastructure Portfolio and
Natural Resources Portfolio for their respective investment management and
administration fees in the amounts of $8,249 and $51,353, $48,901 and $0, and
$28,500 and $213,856, respectively; for the same periods, the Financial Services
Fund, Infrastructure Fund and Natural Resources Fund paid administration fees of
$3,029 and $18,756, $19,370 and $208,892, and $10,436 and $74,485, respectively.
However, LGT Asset Management reimbursed those Funds for such fees in the
amounts of $3,029 and $18,756, $19,370 and $177,376, and $10,436 and $74,485,
respectively. (Accordingly, LGT Asset Management reimbursed the Financial
Services Fund, Infrastructure Fund and Natural Resources Fund and their
respective Portfolios investment management and administration fees in the
aggregate amounts of $11,278 and $70,109, $68,271 and $177,376, and $38,936 and
$288,341, respectively.) For the fiscal period December 30, 1994 (commencement
of operations) to October 31, 1995, LGT Asset Management reimbursed the Consumer
Products and Services Portfolio for investment management and administration
fees in the amount of $16,284. For the same period, the Consumer Products and
Services Fund paid $5,933 in administration fees; however, LGT Asset Management
reimbursed the Fund in the amount of $5,933. Accordingly, LGT Asset Management
reimbursed the Consumer Products and Services Fund and its Portfolio investment
management and administration fees in the aggregate amount of $22,217.
For the fiscal year ended October 31, 1995, LGT Asset Management, pursuant to a
voluntary expense undertaking to limit expenses to the maximum annual level of
1.90%, respectively, of average daily net assets of the Advisor Class shares of
the
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL THEME FUNDS
Funds, reimbursed the Financial Services Fund, Natural Resources Fund, and
Consumer Products and Services Fund for expenses in the additional amounts of
$438,217, $30,769, and $244,975, respectively.
DISTRIBUTION SERVICES RELATING TO EACH FUND
Each Fund's Advisor Class shares are offered continuously through each Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
GT Services, the Funds' Transfer Agent, has been retained by the Funds to
perform shareholder servicing, reporting and general transfer agent functions
for the Funds. For these services, the Transfer Agent receives an annual
maintenance fee of $17.50 per account, a new account fee of $4.00 per account, a
per transaction fee of $1.75 for all transactions other than exchanges and a per
exchange fee of $2.25. The Transfer Agent is also reimbursed by the Funds for
its out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
As of October 31, 1995, the Health Care Fund, Telecommunications Fund, Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund paid LGT Asset Management fees of $30,660, $170,297, $616,
$5,836, $1,931 and $318, respectively, for accounting services.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by LGT Asset
Management, GT Global and other agents. These expenses include, in addition to
the advisory, administration, distribution, transfer agency, pricing and
accounting agency and brokerage fees described above, legal and audit expenses,
custodian fees, trustees' fees, organizational fees, fidelity bond and other
insurance premiums, taxes, extraordinary expenses and expenses of reports and
prospectuses sent to existing investors. The allocation of general Company
expenses and expenses shared among the Funds and other funds organized as series
of the Company are allocated on a basis deemed fair and equitable, which may be
based on the relative net assets of the Funds or the nature of the service
performed and relative applicability to the Funds. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Funds or the
Portfolios generally are higher than the comparable
expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined each day on which the New York Stock Exchange
("NYSE") is open for business ("Business Day") as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time). Currently, the
NYSE is closed on weekends and on certain days relating to the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th,
Labor Day, Thanksgiving Day and Christmas Day.
Each Theme Portfolio's securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by LGT Asset Management to be the primary market.
Securities traded in the OTC market are valued at the last available sale price
prior to the time of valuation.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
LGT Asset Management deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term debt investments
are amortized to maturity based on their cost, adjusted for foreign exchange
translation.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL THEME FUNDS
Options on indices, securities and currencies purchased by the Theme Portfolios
are valued at their last bid price in the case of listed options or at the
average of the last bid prices obtained from dealers, unless a quotation from
only one dealer is available, in which case only that dealers price will be
used, in the case of OTC options. When market quotations for futures and options
on futures held by a Theme Portfolio are readily available, those positions will
be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities that are subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under the
direction of the Portfolios' Board of Trustees or the Company's Board of
Directors, as applicable. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration is
generally given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by the Theme Portfolios in connection with such disposition). In
addition, other factors, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of each Fund's total assets (which, for each
Feeder Fund is the value of its investment in its corresponding Portfolio). Each
Fund's liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of a Fund's net assets is so determined, that value
is then divided by the total number of shares outstanding (excluding treasury
shares), and the result, rounded to the nearer cent, is the net asset value per
share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If none of these alternatives
are available or none are deemed to provide a suitable methodology for
converting a foreign currency into U.S. dollars, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in various
foreign markets on days on which the NYSE is not open. Trading in securities on
European and Far Eastern securities exchanges and OTC markets generally is
completed well before the close of business in New York. Consequently, the
calculation of each Fund's net asset value may not always take place
contemporaneously with the determination of the prices of securities held by
each Fund. Events affecting the values of securities held by the Theme
Portfolios that occur between the time their prices are determined and the close
of normal trading on the NYSE will not be reflected in a Fund's net asset value
unless LGT Asset Management, under the supervision of the Company's Board of
Directors or the Portfolios' Board of Trustees, as applicable, determines that
the particular event would materially affect net asset value. As a result, a
Fund's net asset value may be significantly affected by such trading on days
when a shareholder has no access to that Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares of a Fund purchased should accompany the
purchase order, or funds should be wired to the Transfer Agent as described in
the Prospectus. Payment, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is canceled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL THEME FUNDS
to reimburse the Fund for the loss incurred. Investors whose purchase orders
have been canceled due to nonpayment may be prohibited from placing future
orders.
Each Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, each Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
of a Fund may be exchanged only for Advisor Class shares of other GT Global
Mutual Funds. The exchange privilege is not an option or right to purchase
shares but is permitted under the current policies of the respective GT Global
Mutual Funds. The privilege may be discontinued or changed at any time by any of
the funds upon sixty days prior written notice to the shareholders of such fund
and is available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the fund to be purchased and
should consider the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by that Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Funds and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon thirty days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
Each Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Funds or the Portfolios
from disposing of portfolio securities owned by them or in fairly determining
the value of its assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
a Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL THEME FUNDS
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), each Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- -- options or Futures (other than those on foreign currencies), or foreign
currencies (or options, Futures or Forward Contracts thereon) that are not
directly related to the Fund's principal business of investing in securities (or
options and Futures with respect to securities) ("Short-Short Limitation"); (3)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. Each
Feeder Fund, as an investor in its corresponding Portfolio, is deemed to own a
proportionate share of the Portfolio's assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether the Fund
satisfies all the requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Feeder
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICs") and other foreign securities by its corresponding
Portfolio and to the Health Care Fund and Telecommunications Fund of those
transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FEEDER FUNDS. Each Portfolio is
treated as a separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each Feeder Fund, as an investor in its
corresponding Portfolio, is required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also is not subject to New York
income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets, and to earn a proportionate share of
its corresponding Portfolio's income, for purposes of determining whether the
Fund satisfies the requirements to qualify as a RIC, each Portfolio intends to
conduct its operations so that its corresponding Fund will be able to satisfy
all those requirements.
Distributions to each Feeder Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in its Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, and
(3) loss will be recognized if a liquidation distribution consists solely of
cash and/or unrealized receivables. Each Feeder
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL THEME FUNDS
Fund's basis for its interest in its corresponding Portfolio generally will
equal the amount of cash and the basis of any property the Fund invests in the
Portfolio, increased by the Fund's share of the Portfolio's net income and gains
and
decreased by (a) the amount of cash and the basis of any property the Portfolio
distributes to the Fund and (b) the Fund's share of the Portfolio's losses.
FOREIGN TAXES. Dividends and interest received by a Theme Portfolio may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
foreign taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors. If more than 50%
of the value of a Fund's total assets (taking into account, in the case of a
Feeder Fund, its proportionate share of its corresponding Portfolio's assets) at
the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign income taxes paid
by it (taking into account, in the case of a Feeder Fund, its proportionate
share of those taxes paid by its corresponding Portfolio). Pursuant to the
election, a Fund will treat those taxes as dividends paid to its shareholders
and each shareholder will be required to (1) include in gross income, and treat
as paid by him, his proportionate share of those taxes, (2) treat his share of
those taxes and of any dividend paid by the Fund that represents income from
foreign sources as his own income from those sources, and (3) either deduct the
taxes deemed paid by him in computing his taxable income or, alternatively, use
the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Fund will report to its shareholders shortly after each
taxable year their respective shares of the Fund's income (taking into account,
in the case of a Feeder Fund, its proportionate share of its corresponding
Portfolio's income) from sources within, and taxes paid to, foreign countries
and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Theme Portfolio may invest in the
stock of PFICs. A PFIC is a foreign corporation that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or (2)
an average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a Fund will be subject to
federal income tax on a part (or, in the case of a Feeder Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of a Feeder Fund, by its corresponding Portfolio) on the stock of a
PFIC or of any gain on the Fund's (or, in the case of a Feeder Fund, its
corresponding Portfolio's) disposition of that stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders.
If a Theme Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) will be required to include in income each year its
pro rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by that Theme Portfolio (or, in the
case of a Portfolio, its corresponding Feeder Fund) to satisfy the Distribution
Requirement and to avoid imposition of the Excise Tax -- even if those earnings
and gain were not received thereby. In most instances it will be very difficult,
if not impossible, to make this election because of certain requirements
thereof.
Pursuant to proposed regulations, open-end RICs, such as the Funds, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Theme Portfolios'
use of hedging transactions, such as selling (writing) and purchasing options
and Futures and entering into Forward Contracts, involves complex rules that
will determine, for federal income tax purposes, the character and timing of
recognition of the gains and losses a Theme Portfolio realizes in connection
therewith. Gains from foreign currencies (except certain gains that may be
excluded by future regulations), and gains from the disposition of options,
Futures and Forward Contracts derived by a Theme Portfolio with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Theme Portfolio (or, in
the case of a Portfolio, its corresponding Feeder Fund). However, income from
the disposition by a Theme Portfolio of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that Theme
Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund) if
they are held for less than three months. Income from the disposition by a Theme
Portfolio of foreign currencies, and options, Futures and Forward Contracts on
foreign currencies, that are not directly related to its principal business of
investing in securities (or options and Futures with respect thereto) also will
be subject to the Short-
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL THEME FUNDS
Short Limitation for that Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) if they are held for less than three months.
If a Theme Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Theme Portfolio
(or, in the case of a Portfolio, its corresponding Feeder Fund) satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Theme Portfolio intends that, when it engages in hedging transactions, it will
qualify for this treatment, but at the present time it is not clear whether this
treatment will be available for all of those transactions. To the extent this
treatment is not available, a Theme Portfolio may be forced to defer the closing
out of certain options, Futures, Forward Contracts or foreign currency positions
beyond the time when it otherwise would be advantageous to do so, in order for
that Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder
Fund) to continue to qualify as a RIC.
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Theme Portfolio at the end of its taxable
year generally will be deemed to have been sold at market value for federal
income tax purposes. Sixty percent of any net gain or loss recognized on these
deemed sales, and 60% of any net gain or loss realized from any actual sales of
Section 1256 Contracts, will be treated as long-term capital gain or loss, and
the balance will be treated as short-term capital gain or loss. Section 988 of
the Code also may apply to gains and losses from transactions in foreign
currencies, foreign-currency-denominated debt securities and options, Futures
and Forward Contracts on foreign currencies ("Section 988 gains or losses").
Each Section 988 gain or loss generally is computed separately and treated as
ordinary income or loss. In the case of overlap between sections 1256 and 988,
special provisions determine the character and timing of any income, gain or
loss. Each Theme Portfolio attempts to monitor section 988 transactions to
minimize any adverse tax impact.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund (directly or through a
Portfolio) from U.S. corporations. However, dividends received by a corporate
shareholder and deducted by it pursuant to the dividends-received deduction may
be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual or nonresident alien fiduciary of a trust or
estate, foreign corporation or foreign partnership ("foreign shareholder") will
be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. Distributions of net capital gain are not subject to
withholding, but in the case of a foreign shareholder who is a nonresident alien
individual, those distributions ordinarily will be subject to U.S. income tax at
a rate of 30% (or lower treaty rate) if the individual is physically present in
the United States for more than 182 days during the taxable year and the
distributions are attributable to a fixed place of business maintained by the
individual in the United States.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL THEME FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of LGT Asset
Management and its worldwide affiliates. Other worldwide affiliates of
Liechtenstein Global Trust include LGT Bank in Liechtenstein, formerly Bank in
Liechtenstein, an international financial services institution founded in 1920.
LGT Bank in Liechtenstein has principal offices in Vaduz, Liechtenstein. Its
subsidiaries currently include LGT Bank in Liechtenstein (Deutschland) GmbH,
formerly Bank in Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG,
formerly Bilfinanz und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT
Investment Trust Management Ltd., formerly G.T. Management (Japan) Ltd. in
Tokyo; LGT Asset Management Pte. Ltd., formerly G.T. Management (Singapore) PTE
Ltd. located in Singapore; LGT Asset Management Ltd., formerly G.T. Management
(Australia) Ltd., located in Sydney; and LGT Asset Management GmbH, formerly BIL
Asset Management GmbH, located in Frankfurt, Germany.
THE COMPANY
The Company was organized as a Maryland corporation on October 29, 1987. Until
April 28, 1989, the name of the Company was GT Global Income Series, Inc. From
time to time, the Company may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Company's common
stock.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Theme Portfolios' assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Theme Portfolios to be held in
separate accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Company's and Global Investment Theme Portfolio's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P. conducts annual audits of the Portfolios' and
the Funds' financial statements, assists in the preparation of each Portfolio's
and each Fund's federal and state income tax returns and consults with the
Company and Global Investment Portfolio as to matters of accounting, regulatory
filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein, and are included in reliance upon such
opinion given upon the authority of said firm as experts in accounting and
auditing.
USE OF NAME
LGT Asset Management has granted the Company the right to use the "GT" and "GT
Global" name and has reserved the right to withdraw its consent to the use of
such names by the Company at any time, or to grant the use of such names to any
other company.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
Each Fund's "Standardized Return," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated
separately for Class A, Class B and Advisor class shares of each Fund, as
follows: Standardized Return ("T") is computed by using the value at the end of
the period ("EV") of a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the SEC:
P(1+T)(n) = EV. The following assumptions will be reflected in computations made
in accordance with this formula: (1) for Class A shares, deduction of the
maximum sales charge of 4.75% from the $1,000 initial investment; (2) for Class
B shares, deduction of the applicable contingent deferred sales charge imposed
on a redemption of Class B shares held for the period; (3) reinvestment of
dividends and other distributions at net asset value on the reinvestment date
determined by the Board and (4) a complete redemption at the end of any period
illustrated.
The Standardized Returns for Advisor Class shares of the Health Care Fund and
Telecommunications Fund, stated as aggregate total returns for the period June
1, 1995 (commencement of operations) to October 31, 1995, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- ---------------------------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 through October 31, 1995............................................................... 17.10% 7.94%
</TABLE>
As discussed in the Prospectus, each Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. The Non-Standardized Returns for the Advisor
Class shares of the Health Care Fund and Telecommunications Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
TELECOMMUNI-
HEALTH CARE CATIONS
PERIOD FUND FUND
- ---------------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
June 1, 1995 through October 31, 1995............................................................... 17.10% 7.94%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for Advisor Class shares, stated as aggregate total returns
for the period June 1, 1995 (commencement of operations) to October 31, 1995,
were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
June 1, 1995 through October 31, 1995............................ 7.75% 1.17% 0.17%
</TABLE>
The Non-Standardized Returns for Advisor Class shares of Financial Services
Fund, Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns for the period June 1, 1995 (commencement of operations) to October 31,
1995, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
June 1, 1995 through October 31, 1995............................ 7.75% 1.17% 0.17%
</TABLE>
The Standardized Return for the Advisor Class shares of Consumer Products and
Services Fund stated as aggregate total return for the period June 1, 1995
(commencement of operations) to October 31, 1995 was 23.65%.
The Non-Standardized Return for Advisor Class shares of Consumer Products and
Services Fund stated as aggregate total return for the period June 1, 1995,
through October 31, 1995, was 23.65%.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL THEME FUNDS
The Standardized Returns for the Class A shares of Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.10%
January 27, 1992 through October 31, 1995............................................................. n/a
November 1, 1990 through October 31, 1995............................................................. 12.56%
August 7, 1989 through October 31, 1995............................................................... 12.05 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.49 %
January 27, 1992 through October 31, 1995............................................................. 11.08 %
November 1, 1990 through October 31, 1995............................................................. n/a
August 7, 1989 through October 31, 1995............................................................... n/a
</TABLE>
The Standardized Returns for the Class B Shares of the Health Care Fund and
Telecommunications Fund, which were first offered April 1, 1993, stated as
aggregate returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.17%
April 1, 1993 through October 31, 1995................................................................ 46.06%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.96 %
April 1, 1993 through October 31, 1995................................................................ 33.92 %
</TABLE>
The Standardized Returns for the Class B Shares of the Health Care Fund and
Telecommunications Fund, which were first offered April 1, 1993, stated as
average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 14.17%
April 1, 1993 through October 31, 1995................................................................ 15.79%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -7.96 %
April 1, 1993 through October 31, 1995................................................................ 11.97 %
</TABLE>
As discussed in the Prospectus, each Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. The Non-Standardized Returns for the Class A
shares of the Health Care Fund and Telecommunications Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ------------ --------------
<S> <C> <C>
Fiscal year ended October 31, 1995.................................................................... 19.79 % -2.88 %
January 27, 1992 through October 31, 1995............................................................. n/a 55.88 %
August 7, 1989 through October 31, 1995............................................................... 113.42 % n/a
</TABLE>
The Non-Standardized Returns for the Class B shares of the Health Care Fund and
Telecommunications Fund, which were first offered on April 1, 1993, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.17%
April 1, 1993 through October 31, 1995................................................................ 49.06%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -3.37 %
April 1, 1993 through October 31, 1995................................................................ 36.92 %
</TABLE>
The Non-Standardized Returns for the Class A shares of the Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.79%
January 27, 1992 through October 31, 1995............................................................. n/a
November 1, 1990 through October 31, 1995............................................................. 13.66%
August 7, 1989 through October 31, 1995............................................................... 12.93 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -2.88 %
January 27, 1992 through October 31, 1995............................................................. 12.53 %
November 1, 1990 through October 31, 1995............................................................. n/a
August 7, 1989 through October 31, 1995............................................................... n/a
</TABLE>
The Non-Standardized Returns for the Class B shares of the Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... 19.17%
April 1, 1993 through October 31, 1995................................................................ 16.71%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
Fiscal year ended October 31, 1995.................................................................... -3.37 %
April 1, 1993 through October 31, 1995................................................................ 12.93 %
</TABLE>
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL THEME FUNDS
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -2.29% -7.50% -11.97%
May 31, 1994 through October 31, 1995........................................ -0.47% 0.65% -3.14%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -2.29% -7.50% -11.97%
May 31, 1994 through October 31, 1995........................................ -0.67% -0.92% -4.42%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class B shares, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -3.02 % -8.20% -12.64%
May 31, 1994 through October 31, 1995........................................ -0.50 % 1.25% -4.39%
</TABLE>
The Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- ----------------------------------------------------------------------------- ----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended October 31, 1995.................................................. -3.02 % -8.20% -12.64%
May 31, 1994 through October 31, 1995........................................ -0.35 % 0.88% -3.11%
</TABLE>
The Non-Standardized Returns for the Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 2.58 % -2.89 %
May 31, 1994 through October 31, 1995........................................ 4.29 % 5.95 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -7.58 %
May 31, 1994 through October 31, 1995........................................ 0.34 %
</TABLE>
The Non-Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 1.98 % -3.37 %
May 31, 1994 through October 31, 1995........................................ 3.50 % 5.25 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -8.05 %
May 31, 1994 through October 31, 1995........................................ -0.41 %
</TABLE>
The Non-Standardized Returns for the Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 2.58 % -2.89 %
May 31, 1994 through October 31, 1995........................................ 3.00 % 4.16 %
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -7.58 %
May 31, 1994 through October 31, 1995........................................ 0.24 %
</TABLE>
The Non-Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as avarage annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Year ended October 31, 1995.................................................. 1.98% -3.37%
May 31, 1994 through October 31, 1995........................................ 2.45% 3.67%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ------------------
<S> <C>
Year ended October 31, 1995.................................................. -8.50%
May 31, 1994 through October 31, 1995........................................ -0.29%
</TABLE>
The Standardized Return for the Class A shares of Consumer Products and Services
Fund stated as aggregate total return for the period December 30, 1994
(commencement of operations) to October 31, 1995 was 21.58%. Standardized Return
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL THEME FUNDS
for Consumer Products and Service Fund's Class B shares, stated as aggregate
total return, for the same period was 22.12%.
The Non-Standardized Return for the Class A shares of Consumer Products and
Services Fund stated as aggregate total return for the period December 30, 1994
(commencement of operations) to October 31, 1995 was 27.65%. Non-Standardized
Return for such Fund's Class B shares for the same period, stated as aggregate
return, was 27.12%.
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present or prospective shareholders compare
a Fund with, but not limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Hutton Government/Corporate Bond Index, which is
a comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service,
Inc. or BBB by Standard and Poor's, or, in the case of nonrated bonds, BBB
by Fitch Investors Service (excluding collateralized mortgage obligations).
(3) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
(4) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
outside of such peer group. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(5) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(6) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL THEME FUNDS
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(12) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(13) The World Bank Publication of Trends in Developing Countries (TIDE).
TIDE provides brief reports on most of the World Bank's borrowing members.
The World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunication companies in the developing and emerging countries.
(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports, produced by the World Bank
and its affiliates.
(18) Various publications from the International Bank for Reconstruction
and Development.
(19) Various publications including, but not limited to ratings agencies
such as Moody's Investors Service, Inc., Fitch Investor's Service, Inc.,
Standard & Poor's.
(20) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(21) Bank Rate National Monitor Index, which an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(22) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(24) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J. P. Morgan, Morgan
Stanley, Smith Barney Shearson, S.G. Warburg, Jardine Flemming, Barings
Securities, The Bank for International Settlements, Asian Development Bank,
Bloomberg, L.P., and Ibbottson Associates, may be used, as well as information
reported by the Federal Reserve and the respective Central Banks of various
nations. In addition, GT Global may use performance rankings, ratings and
commentary reported periodically in national financial publications, including
but not limited to, Money Magazine, Smart Money, Global Finance, EuroMoney,
Financial World, Forbes, Fortune, Business Week, Latin Finance, the Wall Street
Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal Finance,
Barron's, The Financial Times, USA Today, The New York Times Far Eastern
Economic Review, The Economist and Investors Business Digest. Each Fund may
compare its performance to that of other compilations or indices of comparable
quality to those listed above and other indices which may be developed and made
available in the future.
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the 1933 Act on account of the inclusion of such
information herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g. Japanese
Yen, German Deutschemark, Hong Kong Dollar). A foreign currency which has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL THEME FUNDS
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
LGT Asset Management, as each Fund's investment manager, actively purchases and
sells securities in seeking each Fund's investment objective. Moreover, each
Fund may invest a portion of its assets in corporate bonds, while certain
indices relate only to government bonds. Each of these factors will cause the
performance of each Fund to differ from the relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of each Fund's assets under management
or rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes each Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT Global may describe general principles of investing,
such as asset allocation, diversification and risk tolerance. Each Fund does not
represent a complete investment program and the investors should consider each
Fund as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
From time to time, GT Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products although there can be no assurance that
any GT Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans that offer
deferral of income taxes on investment earnings and may also enable an investor
to make pre-tax contributions. Because of their advantages, these retirement
plans may produce returns superior to comparable non-retirement investments. In
sales material and advertisements, the Funds may also discuss these accounts and
plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 (or if
less, 100% of compensation) each year to an IRA. If your spouse is not
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL THEME FUNDS
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible roll-over distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS AND SALARY REDUCTION SEP-IRAS: Simplified employee pension plans
("SEPs" or "SEP-IRAs") and salary-reduction SEPs provide self-employed
individuals (and any eligible employees) with benefits similar to Keogh-type
plans or Code Section 401(k) plans, but with fewer administrative requirements
and therefore potential lower annual administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit organizations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING CODE SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A Code Section 401(k) plan, a type of profit-sharing plan,
additionally permits the eligible, participating employees to make pre-tax
salary reduction contributions to the plan (up to certain limitations).
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Funds and GT Global will quote certain data regarding
industries, individual countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including, but
not limited to, the economic and financial data of such financial organizations
as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, GT Guide
to World Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country, industry or market: International Finance
Corporation, GT Guide to World Equity Markets, Salomon Brothers Inc., and
S.G. Warburg.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL THEME FUNDS
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
LGT Asset Management, Inc.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 LGT Asset Management provided assistance to the government of Hong Kong
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Investment Management Trust Ltd. as one of the first
foreign discretionary investment managers for Japanese investors. Such
accomplishments, however, should not be viewed as an endorsement of LGT Asset
Management by the government of Hong Kong, Japan's Ministry of Finance or any
other government or government agency. Nor do any such accomplishments of LGT
Asset Management provide any assurance that the GT Global Mutual Funds'
investment objectives will be achieved.
THE GT ADVANTAGE
LGT Asset Management has developed a unique team approach to its global money
management which we call the GT Advantage. LGT Asset Management's money
management style combines the best of the "top-down" and "bottom-up" investment
manager strategies. The top-down approach is implemented by LGT Asset
Management's Investment Policy Committee, which sets broad guidelines for asset
allocation and currency management, based on LGT Asset Management's own
macroeconomic forecasts and research from our worldwide offices. The bottom-up
approach utilizes regional teams of individual portfolio managers to implement
the committee's guidelines by selecting local securities that offer strong
growth and income potential.
GENERAL INFORMATION ABOUT THE THEME FUNDS AND THEME PORTFOLIOS
Each Theme Portfolio may invest worldwide across industries within the Portfolio
area of concentration without national or regional restrictions. The ability of
each Theme Portfolio to invest worldwide may allow the portfolio managers to
select industries in different economic cycles and varying stages of
development, though there is no assurance that the managers will be successful
in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of
the Fund. GT Global believes that there are certain social, political and
economic trends that may benefit one or more industries within a Theme
Portfolio's area of concentration. Of course, there is no assurance that any of
the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, data regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and its enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL THEME FUNDS
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from, but not limited to, the following sources:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / International Finance Corporation (IFC) and publications such as the
EMERGING STOCK MARKETS FACTBOOK
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Health Care Fund and LGT Asset Management believe that certain market and
demographic factors merit an investor's consideration of making a health care
investment. Worldwide standards of living and life expectancy have increased at
a substantial rate during the past twenty years (based on the most recent data
available at December 31, 1992, as compiled by the OECD). LGT Asset Management
expects this growth, which works to the general benefit of the global health
care industry, to continue at a roughly comparable rate in the future, although
no assurances can be given in this regard. Moreover, according to LGT Asset
Management, the health care industry historically has proven to be a relatively
non-cyclical industry that continues to provide goods and services to the public
in periods of economic weakness as well as economic strength.
LGT Asset Management believes that the anticipated increase in the world's
elderly population could increase demand for health care products and services.
For example, according to data compiled by LGT Asset Management, in Japan the
number of people age 65 and older is expected to grow over 100% by the year
2025; in Germany, France and the U.S., the same age group should grow 40%.
Similarly, the U.S. Census Bureau predicts the number of Americans 85 and older
to double in the next 30 years. From time to time, the Fund and GT Global will
quote information including, but not limited to, international data regarding
populations, birth rates, mortality rates, life expectancy, health care
expenditures, and gross domestic product vs. life expectancy. The information
quoted has not been independently verified by the Fund or GT Global and will be
based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, data regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization of telecommunications companies
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from but not limited to the following sources:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants (ITC), a Washington D.C. based firm
which publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT
and LATIN AMERICAN TELECOM REPORT
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced new competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
LGT Asset Management expects this scenario to continue to benefit such companies
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL THEME FUNDS
in the U.S. and similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, data regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent Companies and the products and services they distribute
/ / Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from, but not limited to, the following sources:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / The International Finance Corporation (IFC) and its publications
/ / The Organization for Economic Cooperation and Development (OECD) and its
publications
INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
FINANCIAL SERVICES FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
NATURAL RESOURCES
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL THEME FUNDS
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") employs the designations "Prime-1"
and "Prime-2" to indicate commercial paper having the highest capacity for
timely repayment. Issuers rated Prime-1 (or supporting institutions)have a
superior ability for repayment of short-term debt obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of short-term debt obligations. This normally will be evidenced by
many of the characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S ("S&P") rates commercial paper in four categories ranging from
"A-1" for the highest quality obligations to "D" for the lowest. A-1 -- This
highest category indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus sign (+) designation. A-2 --
Capacity for timely payment on issues with this designation is satisfactory. If,
however, the relative degree of safety is not as high as for issues designated
"A-1." A-3 -- Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. B -- Issues
rated "B" are regarded as having only speculative capacity for timely payment. C
- -- This rating is assigned to short-term debt obligations with a doubtful
capacity for payment. D -- Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL THEME FUNDS
DESCRIPTION OF BOND RATINGS
MOODY'S rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered
well-assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data opertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL THEME FUNDS
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" category is used when interest payments
or principal payments are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such payments will be
made during such grace period. This rating will also be used up on the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Theme Fund (except Consumer Products
and Services Fund) at October 31, 1995, and for the year then ended, and the
audited financial statements of Consumer Products and Services Fund for the
period December 30, 1994 (commencement of operations) to October 31, 1995,
appear on the following pages.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Financial Services Fund and Board of
Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Financial Services Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year then ended and for the period from May 31,
1994 (commencement of operations) to October 31, 1994. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Financial Services Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period from May 31,
1994 (commencement of operations) to October 31, 1994, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Financial Services Portfolio
(cost $9,002,833) (Note 1)....................... $ 9,793,244
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 508,326
Unamortized organizational costs (Note 1)......... 45,222
Receivable for Fund shares sold................... 14,613
-----------
Total assets.................................... 10,361,405
-----------
Liabilities:
Payable for professional fees..................... 25,862
Payable for printing and postage expenses......... 23,965
Payable for administration fees (Note 2).......... 18,755
Payable for registration and filing fees.......... 7,768
Payable for service and distribution expenses
(Note 2)......................................... 6,302
Payable for transfer agent fees (Note 2).......... 5,473
Payable for Fund shares repurchased............... 4,661
Payable for Directors' fees and expenses (Note
2)............................................... 672
Payable for fund accounting fees (Note 2)......... 229
Other accrued expenses............................ 1,933
-----------
Total liabilities............................... 95,620
-----------
Net assets.......................................... $10,265,785
-----------
-----------
Class A:
Net asset value and redemption price per share
($5,687,073 DIVIDED BY 477,029 shares
outstanding)....................................... $ 11.92
-----------
-----------
Maximum offering price per share (100/95.25 of
$11.92) *.......................................... $ 12.51
-----------
-----------
Class B:+
Net asset value and offering price per share
($4,547,654 DIVIDED BY 384,353 shares
outstanding)....................................... $ 11.83
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($31,058 DIVIDED BY
2,599 shares outstanding).......................... $ 11.95
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $ 9,845,942
Undistributed net investment income............... 86,274
Accumulated net realized loss on investments and
foreign currency transactions.................... (456,842)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Financial Services Portfolio.............. 13,982
Net unrealized appreciation of investments --
Global Financial Services Portfolio.............. 776,429
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $10,265,785
-----------
-----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income -- Global Financial Services Portfolio.... $ 224,978
Interest income -- Global Financial Services Portfolio.... 60,482
----------
Total investment income................................. 285,460
----------
Expenses:
Expenses -- Global Financial Services Portfolio........... 103,397
Registration and filing fees.............................. 174,700
Printing and postage expenses............................. 133,800
Legal fees................................................ 82,518
Service and distribution expenses: (Note 2)
Class A.................................. $ 20,817
Class B.................................. 33,277 54,094
----------
Audit fees................................................ 52,550
Transfer agent fees (Note 2).............................. 51,593
Administration fees (Note 2).............................. 18,756
Directors' fees and expenses (Note 2)..................... 11,950
Amortization of organization costs (Note 1)............... 12,620
Fund accounting fees (Note 2)............................. 1,930
Other expenses............................................ 4,491
----------
Total expenses before reductions........................ 702,399
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2).............................................. (508,326)
Expense reductions -- Global Financial Services
Portfolio............................................. (1,771)
----------
Total net expenses...................................... 192,302
----------
Net investment income....................................... 93,158
----------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
Financial Services Portfolio.............. (405,844)
Net realized loss on foreign currency
transactions -- Global
Financial Services Portfolio.............. (32,894)
----------
Net realized loss during the year....................... (438,738)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies -- Global Financial
Services Portfolio........................ 13,973
Net change in unrealized appreciation of
investments -- Global
Financial Services Portfolio.............. 743,739
----------
Net unrealized appreciation during the year............. 757,712
----------
Net realized and unrealized gain on investments and foreign
currencies................................................. 318,974
----------
Net increase in net assets resulting from operations........ $ 412,132
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................... $ 93,158 $ 5,694
Net realized loss on investments and
foreign currency transactions -- Global
Financial Services Portfolio.............. (438,738) (32,440)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global Financial
Services Portfolio........................ 13,973 9
Net change in unrealized appreciation of
investments -- Global Financial Services
Portfolio................................. 743,739 32,690
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 412,132 5,953
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 10,643,479 5,652,003
Decrease from capital shares repurchased... (6,199,828) (347,954)
----------------- -----------------
Net increase from capital share
transactions............................ 4,443,651 5,304,049
----------------- -----------------
Total increase in net assets................. 4,855,783 5,310,002
Net assets:
Beginning of period........................ 5,410,002 100,000
----------------- -----------------
End of period.............................. $10,265,785 $5,410,002
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
--------------------------------- --------------------------------- -------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF TO
OCTOBER 31, OPERATIONS) TO OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995(D) OCTOBER 31, 1994 1995(D) OCTOBER 31, 1994 1995
------------ ------------------- ------------ ------------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.62 $ 11.43 $ 11.60 $ 11.43 $ 11.09
------------ ------- ------------ ------- -------------
Income from investment operations:
Net investment income................. 0.17* 0.02* 0.11* 0.00* 0.09*
Net realized and unrealized gain on
investments.......................... 0.13 0.17 0.12 0.17 0.77
------------ ------- ------------ ------- -------------
Net increase from investment
operations......................... 0.30 0.19 0.23 0.17 0.86
------------ ------- ------------ ------- -------------
Net asset value, end of period.......... $ 11.92 $ 11.62 $ 11.83 $ 11.60 $ 11.95
------------ ------- ------------ ------- -------------
------------ ------- ------------ ------- -------------
Total investment return (b)............. 2.58 % 1.66%(c) 1.98 % 1.49%(c) 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,687 $ 3,175 $ 4,548 $ 2,235 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 1.46 % 0.66%(a) 0.96 % 0.16%(a) 1.96%(a)
Without expense reductions and
reimbursement from G.T. Capital...... (5.34)% (7.26)%(a) (5.84)% (7.76)%(a) (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 2.34 % 2.40%(a) 2.84 % 2.90%(a) 1.84%(a)
Without expense reductions and
reimbursement from G.T. Capital...... 9.14 % 10.32%(a) 9.64 % 10.82%(a) 8.64%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Total investment return does not include sales charges.
(c) Not annualized.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income per share would have been reduced by $0.59, $0.59,
$0.30 for Class A, Class B, and Advisor Class, respectively, for the
period ended October 31, 1995, and $0.23 for Class A and Class B from
May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Financial Services Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments. The Fund invests substantially all of
its investable assets in Global Financial Services Portfolio ("Portfolio"),
which is registered as an open-end management investment company under the 1940
Act and has investment objectives, policies and limitations substantially
identical to those of the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio. The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this Report and should be read in
conjunction with the Fund's financial statements.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$437,824, of which $22,442 expires in 2002 and $415,382 expires in 2003.
(C) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Portfolio and timing differences.
(D) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $63,100. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary items) exceed the most stringent
limits prescribed by the laws or regulations of any state in which the Fund's
shares are offered for sale, based on the average total net asset value of the
Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1995, G.T. Global retained $6,892
of such sales charges. G.T. Global also makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $7,543. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate plans of distribution with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by G.T.
Capital of administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $616 to G.T. Capital.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
3. CAPITAL SHARES
At October 31, 1995, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global High
Income Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. The shares of each of the foregoing series
of the Company were divided equally into two classes, designated Class A and
Class B common stock. With respect to the issuance of Advisor Class shares,
100,000,000 shares were classified as shares of each of the fourteen series of
the Company and designated as Advisor Class common stock. 1,400,000,000 shares
remain unclassified. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
---------------------- ---------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 669,827 $ 7,432,400 288,905 $3,352,036
Shares repurchased......................................................... (465,993) (5,162,753) (20,084) (233,975)
--------- ----------- --------- ----------
Net increase............................................................... 203,834 $ 2,269,647 268,821 $3,118,061
--------- ----------- --------- ----------
--------- ----------- --------- ----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
---------------------- ---------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 286,019 $ 3,181,342 198,242 $2,299,967
Shares repurchased......................................................... (94,377) (1,037,075) (9,906) (113,979)
--------- ----------- --------- ----------
Net increase............................................................... 191,642 $ 2,144,267 188,336 $2,185,988
--------- ----------- --------- ----------
--------- ----------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
----------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,599 $ 29,737
Shares repurchased......................................................... -- --
--------- -----------
Net increase............................................................... 2,599 $ 29,737
--------- -----------
--------- -----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.071 per share (representing an approximate total of
$71,998). The total amount of dividend and capital gain taxes paid by the Fund
to such countries was approximately $0.017 per share (representing an
approximate total of $17,755).
Statement of Additional Information Page 56
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Financial Services Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Financial Services Portfolio, including the portfolio of investments, as of
October 31, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets and supplementary data for the year then
ended and for the period from May 31, 1994 (commencement of operations) to
October 31, 1994. These financial statements and the supplementary data are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and the supplementary data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1995 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Financial Services Portfolio as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and
supplementary data for the year then ended and for the period from May 31, 1994
(commencement of operations) to October 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 57
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Banks-Regional (24.5%)
Banco Commercial S.A. - 144A ADR{.} -/- {\/} .............. URGY 11,300 $ 189,274 1.9
Unidanmark AS "A" ......................................... DEN 4,000 183,788 1.9
Thai Farmers Bank, Ltd. - Foreign-/- ...................... THAI 21,100 174,435 1.8
Sparbanken Sverige AB "A" ................................. SWDN 15,000 158,287 1.6
Den Danske Bank ........................................... DEN 2,280 151,087 1.5
Bancorp Hawaii, Inc. ...................................... US 4,000 134,000 1.4
First Tennessee National Corp. ............................ US 2,400 128,400 1.3
Cullen/Frost Bankers, Inc. ................................ US 2,500 127,500 1.3
BayBanks, Inc. ............................................ US 1,500 121,500 1.2
Fokus Banken AS-/- ........................................ NOR 23,600 119,975 1.2
Anglo-Irish Bank Corp. PLC ................................ IRE 109,000 110,258 1.1
Bank of Melbourne Ltd. ................................... AUSL 19,800 100,417 1.0
Mellon Bank Corp. ......................................... US 2,000 100,250 1.0
Union Bank Corp. ......................................... US 2,000 100,250 1.0
Espirito Santo Financial Holding S.A. - ADR{\/} .......... LUX 9,000 99,000 1.0
Advance Bank of Australia Ltd. ............................ AUSL 13,000 96,025 1.0
Allied Irish Bank PLC ..................................... IRE 17,500 88,475 0.9
Westpac Banking Corp., Ltd. ............................... AUSL 20,000 82,090 0.8
PT Bank Internasional Indonesia - Foreign ................. INDO 23,000 80,551 0.8
Commerce Bancorp, Inc. .................................... US 3,000 69,375 0.7
Glacier Bancorp, Inc. ..................................... US 550 11,275 0.1
------------
2,426,212
------------
Banks-Money Center (17.2%)
Bank of Ireland ........................................... IRE 36,000 239,378 2.4
Bank Hapoalim Ltd.-/- ..................................... ISRL 133,000 211,494 2.2
HSBC Holdings PLC ......................................... HK 12,000 174,617 1.8
Bangkok Bank Co., Ltd. - Foreign .......................... THAI 14,300 147,774 1.5
National Westminster Bank PLC ............................. UK 14,800 147,602 1.5
Commercial Bank of Korea-/- ............................... KOR 9,900 110,348 1.1
Krung Thai Bank Ltd. - Foreign ............................ THAI 24,750 98,370 1.0
Bank Leumi Le - Israel-/- ................................. ISRL 67,500 92,833 1.0
Sumitomo Bank ............................................. JPN 5,000 88,543 0.9
Mitsubishi Bank ........................................... JPN 4,000 78,270 0.8
Banco O'Higgins - ADR{\/} ................................ CHLE 3,600 76,950 0.8
Fuji Bank Ltd. ............................................ JPN 4,000 74,357 0.8
Dai-Ichi Kangyo Bank Ltd. ................................. JPN 4,000 67,704 0.7
Citicorp .................................................. US 1,000 64,875 0.7
------------
1,673,115
------------
Securities Brokers (12.4%)
Daiwa Securities Co., Ltd. ................................ JPN 14,000 164,368 1.7
Edwards (A.G.), Inc. ...................................... US 5,600 142,800 1.5
Nikko Securities Co., Ltd. ................................ JPN 14,000 130,672 1.3
Nomura Securities Co., Ltd. ............................... JPN 7,000 128,070 1.3
Peregrine Investment Holdings Ltd. ........................ HK 100,000 127,406 1.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 58
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Securities Brokers (Continued)
Dean Witter, Discover & Co. ............................... US 2,500 $ 124,375 1.3
Yamaichi Securities ....................................... JPN 22,000 115,370 1.2
Charles Schwab Corp. ...................................... US 4,600 105,225 1.1
Kankaku Securities Co.-/- ................................. JPN 27,000 87,173 0.9
Hanshin Securities Co. .................................... KOR 3,500 78,225 0.8
------------
1,203,684
------------
Other Financial (10.7%)
U.S. Order, Inc. .......................................... US 13,100 196,500 2.0
Aboitiz Equity Ventures, Inc.-/- .......................... PHIL 730,000 139,088 1.4
Transaction Network Service-/- ............................ US 6,000 138,000 1.4
Acom Co., Ltd. ............................................ JPN 4,000 130,320 1.3
DST Systems, Inc. ......................................... US 5,000 105,000 1.1
Shohkoh Fund .............................................. JPN 600 104,491 1.1
Compagnie Financiere de Paribas S.A. ...................... FR 1,800 99,049 1.0
JACCS Co., Ltd. ........................................... JPN 10,000 91,185 0.9
State Street Boston Corp. ................................. US 1,250 48,594 0.5
------------
1,052,227
------------
Investment Management (8.1%)
Alliance Capital Management L.P. .......................... US 12,200 256,199 2.6
Invesco PLC - ADR{\/} ..................................... UK 6,000 229,499 2.3
Franklin Resources, Inc. .................................. US 2,000 101,500 1.0
Invesco PLC-/- ............................................ UK 23,300 89,488 0.9
M & G Group PLC ........................................... UK 3,500 72,191 0.7
Eaton Vance Corp. ........................................ US 1,600 58,400 0.6
------------
807,277
------------
Consumer Finance (5.2%)
First Financial Caribbean Corp. ........................... US 10,000 178,124 1.8
Nichiei Co., Ltd. ........................................ JPN 2,000 124,254 1.3
Promise Co., Ltd. ......................................... JPN 3,000 118,286 1.2
Green Tree Financial Corp. ................................ US 3,400 90,525 0.9
------------
511,189
------------
Insurance - Multi-Line (4.6%)
Corporacion Mapfre ........................................ SPN 4,000 205,068 2.1
Allmerica Financial Corp. ................................. US 5,000 125,625 1.3
Axa Group ................................................. FR 2,036 113,118 1.2
------------
443,811
------------
Insurance - Property-Casualty (3.6%)
RenaissanceRe Holdings Ltd. ............................... US 4,000 108,500 1.1
Mid Ocean Ltd. ............................................ US 2,700 95,513 1.0
MBIA, Inc. ................................................ US 1,200 83,550 0.9
AMBAC, Inc. .............................................. US 1,300 54,763 0.6
------------
342,326
------------
Real Estate Investment Trust (2.8%)
Alexander Haagen Properties, Inc. ......................... US 8,900 97,900 1.0
Beacon Properties Corp. ................................... US 4,300 93,525 1.0
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 59
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Real Estate Investment Trust (Continued)
Evans Withycombe Residential, Inc. ........................ US 4,000 $ 75,500 0.8
------------
266,925
------------
Savings & Loans (2.0%)
Leader Financial Corp. .................................... US 3,000 106,875 1.1
Long Island Bancorp, Inc. ................................. US 3,800 86,925 0.9
------------
193,800
------------
Banks-Super Regional (1.6%)
NationsBank Corp. ......................................... US 1,500 98,625 1.0
BankAmerica Corp. ......................................... US 1,000 57,500 0.6
------------
156,125
------------
Insurance-Life (0.9%)
Mapfre Vida Seguros ....................................... SPN 1,700 89,943 0.9
------------ -----
TOTAL EQUITY INVESTMENTS (cost $8,390,205) ................. 9,166,634 93.6
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $860,000 U.S. Treasury Strips due
2/15/02 (market value of collateral is $595,179, including
accrued interest). (cost $575,093) ...................... 575,093 5.9
------------ -----
TOTAL INVESTMENTS (cost $8,965,298) ......................... 9,741,727 99.5
Other Assets and Liabilities ................................ 51,617 0.5
------------ -----
NET ASSETS .................................................. $ 9,793,344 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $9,793,344.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $8,976,777 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 969,371
Unrealized depreciation: (204,421)
-------------
Net unrealized appreciation: $ 764,950
-------------
-------------
</TABLE>
Abbreviation:
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 60
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 2.8 2.8
Chile (CHLE/CLP) ..................... 0.8 0.8
Denmark (DEN/DKK) .................... 3.4 3.4
France (FR/FRF) ...................... 2.2 2.2
Hong Kong (HK/HKD) ................... 3.1 3.1
Indonesia (INDO/IDR) ................. 0.8 0.8
Ireland (IRE/IEP) .................... 4.4 4.4
Israel (ISRL/ILS) .................... 3.2 3.2
Japan (JPN/JPY) ...................... 15.4 15.4
Korea (KOR/KRW) ...................... 1.9 1.9
Luxembourg (LUX/ECU) ................. 1.0 1.0
Norway (NOR/NOK) ..................... 1.2 1.2
Philippines (PHIL/PHP) ............... 1.4 1.4
Spain (SPN/ESP) ...................... 3.0 3.0
Sweden (SWDN/SEK) .................... 1.6 1.6
Thailand (THAI/THB) .................. 4.3 4.3
United Kingdom (UK/GBP) .............. 5.4 5.4
United States (US/USD) ............... 35.8 6.4 42.2
Uruguay (URGY/UYP) ................... 1.9 1.9
------ --- -----
Total ............................... 93.6 6.4 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $9,793,344.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell Dollars) Price Date Appreciation
- ------------------------------------------------------------------------------- ------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Japanese Yen................................................................... 466,686 99.83000 11/14/95 $ 11,126
------------- ------------
Total Contracts to Sell (Receivable amount $477,812)........................... 466,686 $ 11,126
------------- ------------
</TABLE>
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 4.77%
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 61
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$8,965,298) (Note 1)............................. $ 9,741,727
Foreign currencies (cost $524).................... 524
Receivable for securities sold.................... 767,833
Dividends and dividend withholding tax reclaims
receivable....................................... 13,818
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 11,126
Interest receivable............................... 20
Cash held as collateral for securities loaned
(Note 1)......................................... 223,830
-----------
Total assets.................................... 10,758,878
-----------
Liabilities:
Payable for securities purchased.................. 667,221
Payable for investment management and
administration fees (Note 2)..................... 51,353
Payable for professional fees..................... 7,214
Payable for printing and postage expenses......... 4,007
Payable for custodian fees (Note 1)............... 2,943
Payable for Trustees' fees and expenses (Note
2)............................................... 2,849
Other accrued expenses............................ 6,117
Collateral for securities loaned (Note 1)......... 223,830
-----------
Total liabilities............................... 965,534
-----------
Net assets.......................................... $ 9,793,344
-----------
-----------
Net assets consist of:
Paid in capital................................... $ 9,303,972
Accumulated net investment income................. 170,139
Accumulated net realized loss on investments and
foreign currency transactions.................... (471,178)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 13,982
Net unrealized appreciation of investments........ 776,429
-----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $ 9,793,344
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 62
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$10,038)................................................. $ 224,978
Interest income........................................... 60,482
----------
Total investment income................................. 285,460
----------
Expenses:
Investment management and administration fees (Note 2).... 51,353
Custodian fees (Note 1)................................... 25,175
Legal fees................................................ 12,300
Trustees' fees and expenses (Note 2)...................... 7,119
Audit fees................................................ 5,550
Other expenses............................................ 1,900
----------
Total expenses before reductions........................ 103,397
----------
Expense reductions (Note 1 & 4)....................... (1,771)
----------
Total net expenses...................................... 101,626
----------
Net investment income....................................... 183,834
----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $ (405,844)
Net realized loss on foreign currency
transactions.............................. (32,894)
----------
Net realized loss during the year....................... (438,738)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 13,973
Net change in unrealized appreciation of
investments............................... 743,739
----------
Net unrealized appreciation during the year............. 757,712
----------
Net realized and unrealized gain on investments and foreign
currencies................................................. 318,974
----------
Net increase in net assets resulting from operations........ $ 502,808
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 63
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)............... $ 183,834 $ (13,695)
Net realized loss on investments and
foreign currency transactions............. (438,738) (32,440)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 13,973 9
Net change in unrealized appreciation of
investments............................... 743,739 32,690
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 502,808 (13,436)
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 9,881,645 5,089,171
Withdrawals................................ (5,766,944) --
----------------- -----------------
Net increase from beneficial interest
transactions............................ 4,114,701 5,089,171
----------------- -----------------
Total increase in net assets................. 4,617,509 5,075,735
Net assets:
Beginning of period........................ 5,175,835 100,100
----------------- -----------------
End of period.............................. $ 9,793,344 $5,175,835
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 64
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
YEAR
ENDED MAY 31, 1994
OCTOBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO OCTOBER 31, 1994
------------ ------------------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 9,793 $ 5,176
Ratio of net investment income to
average net assets..................... 2.60 % 1.19 %(a)
Ratio of operating expenses to average
net assets:
With expense reductions............... 1.43 % 4.43 %(a)
Without expense reductions............ 1.46 % -- %*
Portfolio turnover rate................. 170 % 53 %
</TABLE>
- ----------------
(a) Annualized
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 65
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Financial Services Portfolio ("Portfolio") is organized as a New York
Trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest on each business day, with
the exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income and
withholding taxes are translated at prevailing exchange rates when earned or
incurred.
The Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
forward foreign currency contracts, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, and the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of assets and
liabilities other than investments in securities at year end, resulting from
changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy
Statement of Additional Information Page 66
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
and sell a currency at a set price on a future date. The market value of the
Forward Contract fluctuates with changes in currency exchange rates. The Forward
Contract is marked-to-market daily and the change in market value is recorded by
the Portfolio as an unrealized gain or loss. When the Forward Contract is
closed, the Portfolio records a realized gain or loss equal to the difference
between the value at the time it was opened and the value at the time it was
closed. Forward Contracts involve market risk in excess of the amounts shown in
the Portfolio's "Statement of Assets and Liabilities." The Portfolio could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Portfolio may enter into
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the Portfolio holds
the underlying security and, for a put, requires the Portfolio to set aside
cash, U.S. government securities, or other liquid, high-grade debt securities in
an amount not less than the exercise price or otherwise provide adequate cover
at all times while the put option is outstanding. The Portfolio may use options
to manage its exposure to the stock market and to fluctuations in currency
values or interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Portfolio may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-
Statement of Additional Information Page 67
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
out basis, unless otherwise specified. Dividends are recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Where a high level of
uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $204,255
were on loan to brokers. The loans were secured by cash collateral of $223,830.
For international securities, cash collateral is received by the Portfolio
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1995, the Portfolio received $201 of income from
securities lending which was used to offset the Portfolio's custody expenses.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Portfolio's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Portfolio may focus its investments in certain related
financial services industries, subjecting the Portfolio to greater risk than a
fund that is more diversified.
(K) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) RESTRICTED SECURITIES
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Financial Services Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$14,536,797 and $10,774,813, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $1,570 under these arrangements.
Statement of Additional Information Page 68
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Infrastructure Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Infrastructure Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets and
the financial highlights for the year then ended and for the period ended May
31, 1994 (commencement of operations) to October 31, 1994. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Infrastructure Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period from May 31,
1994 (commencement of operations) to October 31, 1994, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 69
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Infrastructure Portfolio
(cost $85,307,015) (Note 1)...................... $86,009,828
Receivable for Fund shares sold................... 1,226,018
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 177,376
Unamortized organizational costs (Note 1)......... 36,908
Prepaid expenses.................................. 5,852
-----------
Total assets.................................... 87,455,982
-----------
Liabilities:
Payable for Fund shares repurchased............... 447,839
Payable for administration fees (Note 2).......... 192,675
Payable for service and distribution expenses
(Note 2)......................................... 59,114
Payable for printing and postage expenses......... 38,172
Payable for transfer agent fees (Note 2).......... 37,090
Payable for professional fees..................... 24,211
Payable for registration and filing fees.......... 10,118
Payable for Directors' fees and expenses (Note
2)............................................... 4,772
Payable for fund accounting fees (Note 2)......... 1,881
Other accrued expenses............................ 1,628
-----------
Total liabilities............................... 817,500
-----------
Net assets.......................................... $86,638,482
-----------
-----------
Class A:
Net asset value and redemption price per share
($36,240,755 DIVIDED BY 2,991,734 shares
outstanding)....................................... $ 12.11
-----------
-----------
Maximum offering price per share (100/95.25 of
$12.11) *.......................................... $ 12.71
-----------
-----------
Class B:+
Net asset value and offering price per share
($50,181,400 DIVIDED BY 4,171,435 shares
outstanding)....................................... $ 12.03
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($216,327 DIVIDED BY
17,819 shares outstanding) ........................ $ 12.14
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $86,254,529
Accumulated net realized loss on investments and
foreign currency transactions.................... (318,860)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Infrastructure Portfolio.................. 158,380
Net unrealized appreciation of investments --
Global Infrastructure Portfolio.................. 544,433
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $86,638,482
-----------
-----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 70
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income -- Global Infrastructure Portfolio......... $1,008,999
Interest income -- Global Infrastructure Portfolio......... 692,904
----------
Total investment income.................................. 1,701,903
----------
Expenses:
Expenses -- Global Infrastructure Portfolio................ 727,172
Service and distribution expenses: (Note 2)
Class A.................................. $ 180,627
Class B.................................. 473,441 654,068
-----------
Transfer agent fees (Note 2)............................... 383,369
Administration fees (Note 2)............................... 208,892
Registration and filing fees............................... 144,100
Printing and postage expenses.............................. 144,036
Legal fees................................................. 73,120
Audit fees................................................. 47,550
Directors' fees and expenses (Note 2)...................... 15,950
Fund accounting fees (Note 2).............................. 15,599
Amortization of organization costs (Note 1)................ 10,300
----------
Total expenses before reductions......................... 2,424,156
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................... (177,376)
Expense reductions -- Global Infrastructure
Portfolio.............................................. (37,549)
----------
Total net expenses....................................... 2,209,231
----------
Net investment loss.......................................... (507,328)
----------
Net realized and unrealized loss on
investments and foreign currencies:
Net realized gain on investments -- Global
Infrastructure Portfolio.................. 1,032,988
Net realized loss on foreign currency
transactions -- Global Infrastructure
Portfolio................................. (1,091,351)
-----------
Net realized loss during the year........................ (58,363)
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global
Infrastructure Portfolio.................. 157,236
Net change in unrealized appreciation of
investments -- Global Infrastructure
Portfolio................................. (565,235)
-----------
Net unrealized depreciation during the year.............. (407,999)
----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (466,362)
----------
Net decrease in net assets resulting from operations......... $ (973,690)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 71
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)............... $ (507,328) $ 13,178
Net realized loss on investments and
foreign currency transactions -- Global
Infrastructure Portfolio.................. (58,363) (49,221)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies -- Global
Infrastructure Portfolio.................. 157,236 1,144
Net change in unrealized appreciation of
investments -- Global Infrastructure
Portfolio................................. (565,235) 1,109,668
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (973,690) 1,074,769
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 69,579,771 55,939,368
Decrease from capital shares repurchased... (36,537,085) (2,544,651)
----------------- -----------------
Net increase from capital share
transactions............................ 33,042,686 53,394,717
----------------- -----------------
Total increase in net assets................. 32,068,996 54,469,486
Net assets:
Beginning of period........................ 54,569,486 100,000
----------------- -----------------
End of period.............................. $ 86,638,482 $54,569,486
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 72
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
------------------------------- ------------------------------- -------------
MAY 31, 1994 MAY 31, 1994 JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF YEAR ENDED (COMMENCEMENT OF TO
OCTOBER 31, OPERATIONS) TO OCTOBER 31, OPERATIONS) TO OCTOBER 31,
1995 OCTOBER 31, 1994 1995 OCTOBER 31, 1994 1995
----------- ------------------ ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.47 $ 11.43 $ 12.45 $ 11.43 $ 12.00
----------- -------- ----------- -------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03)* 0.01* (0.09)* (0.01)* 0.02*
Net realized and unrealized gain
(loss) on investments................ (0.33) 1.03 (0.33) 1.03 0.12
----------- -------- ----------- -------- -------------
Net increase (decrease) from
investment operations.............. (0.36) 1.04 (0.42) 1.02 0.14
----------- -------- ----------- -------- -------------
Net asset value, end of period.......... $ 12.11 $ 12.47 $ 12.03 $ 12.45 $ 12.14
----------- -------- ----------- -------- -------------
----------- -------- ----------- -------- -------------
Total investment return (c)............. (2.89)% 9.10 %(b) (3.37)% 8.92 %(b) 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 36,241 $ 23,615 $ 50,181 $ 30,954 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... (0.32)% 0.41 %(a) (0.82)% (0.09)%(a) 0.18%(a)
Without expense reductions and
reimbursement by G.T. Capital........ (0.58)% (0.47)%(a) (1.08)% (0.97)%(a) (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 2.36% 2.40 %(a) 2.86% 2.90 %(a) 1.86%(a)
Without expense reductions and
reimbursement by G.T. Capital........ 2.62% 3.28 %(a) 3.12% 3.78 %(a) 2.12%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income per share would have been reduced by $0.03 for Class
A shares, $0.03 for Class B shares, and $0.02 for Advisor Class shares
for the period ended October 31, 1995. Net investment income per share
would have been reduced by $0.02 for Class A and Class B from May 31,
1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 73
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Infrastructure Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Company has twelve
series of shares in operation, each series corresponding to a distinct portfolio
of investments. The Fund invests substantially all of its investable assets in
Global Infrastructure Portfolio ("Portfolio"), which is registered as an
open-end management investment company under the 1940 Act and has investment
objectives, policies and limitations substantially identical to those of the
Fund. The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the Portfolio of Investments, are
included elsewhere in this Report and should be read in conjunction with the
Fund's financial statements.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(C) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Portfolio and timing differences.
(D) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A, Class B, and
Advisor Class shares for purchase.
Statement of Additional Information Page 74
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1995, G.T. Global retained
$67,021 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $193,268. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate plans of distribution with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by G.T.
Capital of administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $5,836 to G.T. Capital.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
Statement of Additional Information Page 75
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
3. CAPITAL SHARES
At October 31, 1995, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global High
Income Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; and 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund. The shares of each of the foregoing series of the
Company were divided equally into two classes, designated Class A and Class B
common stock. With respect to the issuance of Advisor Class shares, 100,000,000
shares were classified as shares of each of the fourteen series of the Company
and designated as Advisor Class common stock. 1,400,000,000 shares remain
unclassified. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
------------------------ ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,997,022 $ 35,715,669 2,020,133 $24,648,202
Shares repurchased......................................................... (1,898,557) (23,075,894) (131,239) (1,614,053)
---------- ------------ --------- -----------
Net increase............................................................... 1,098,465 $ 12,639,775 1,888,894 $23,034,149
---------- ------------ --------- -----------
---------- ------------ --------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
------------------------ ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,815,712 $ 33,606,616 2,557,551 $31,291,166
Shares repurchased......................................................... (1,130,463) (13,421,180) (75,739) (930,598)
---------- ------------ --------- -----------
Net increase............................................................... 1,685,249 $ 20,185,436 2,481,812 $30,360,568
---------- ------------ --------- -----------
---------- ------------ --------- -----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
------------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold................................................................ 21,018 $ 257,486
Shares repurchased......................................................... (3,199) (40,011)
---------- ------------
Net increase............................................................... 17,819 $ 217,475
---------- ------------
---------- ------------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 76
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Infrastructure Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Infrastructure Portfolio, including the portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets and the supplementary data for the year then
ended and for the period from May 31, 1994 (commencement of operations) to
October 31, 1994. These financial statements and the supplementary data are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and the supplementary data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1995 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Infrastructure Portfolio as of October 31, 1995, the results of its operations
for the year then ended, the changes in its net assets and the supplementary
data for the year then ended and for the period from May 31, 1994 (commencement
of operations) to October 31, 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 77
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (27.3%)
Consolidated Electric Power Asia .......................... HK 1,400,000 $ 2,833,971 3.3
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp.: ............................... KOR -- -- 2.8
ELECTRICAL & GAS UTILITIES
ADR-/- {\/} ............................................. -- 58,000 1,435,500 --
Common-/- ............................................... -- 21,000 938,083 --
ASEA AB "B" Free ......................................... SWDN 22,000 2,172,307 2.5
ELECTRICAL PLANT/EQUIPMENT
Enron Global Power & Pipelines L.L.C. ..................... US 90,000 2,171,250 2.5
ENERGY EQUIPMENT & SERVICES
Empresa Nacional de Electridad S.A. - ADR{\/} ............. SPN 40,000 2,010,000 2.3
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{\/} ............... BOL 62,300 1,814,488 2.1
ELECTRICAL & GAS UTILITIES
Edison S.p.A. ............................................. ITLY 450,000 1,811,527 2.1
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} .................................. CHLE 75,000 1,800,000 2.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR-/- {\/
} ....................................................... BRZL 81,175 1,735,116 2.0
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ............... ASTRI 14,000 1,711,284 2.0
ELECTRICAL & GAS UTILITIES
Capex S.A. ................................................ ARG 260,000 1,677,000 2.0
ELECTRICAL & GAS UTILITIES
MetroGas S.A. - ADR{\/} ................................... ARG 100,000 850,000 1.0
ENERGY EQUIPMENT & SERVICES
AES China Generating Co., Ltd. "A"-/- ..................... US 54,100 541,000 0.6
ELECTRICAL & GAS UTILITIES
------------
23,501,526
------------
Services (20.7%)
ABC Rail Products Corp.-/- ................................ US 115,100 2,560,975 3.0
TRANSPORTATION - ROAD & RAIL
DDI Corp. ................................................. JPN 295 2,392,672 2.8
WIRELESS COMMUNICATIONS
Telefonica de Espana - ADR{\/} ............................ SPN 55,000 2,069,375 2.4
TELEPHONE NETWORKS
SPT Telecom-/- ........................................... CZCH 19,000 1,871,295 2.2
TELEPHONE NETWORKS
WorldCom, Inc.-/- ......................................... US 55,832 1,821,519 2.1
TELEPHONE - LONG DISTANCE
Stet Di Risp .............................................. ITLY 810,000 1,768,188 2.1
TELEPHONE NETWORKS
PT Indonesia Satellite (Indosat) - ADR{\/} ................ INDO 50,000 1,656,250 1.9
TELEPHONE - LONG DISTANCE
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 20,000 1,122,500 1.3
TELEPHONE NETWORKS
Centennial Cellular Corp. "A"-/- .......................... US 60,000 1,095,000 1.3
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 78
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Pakistan Telecommunications Co., Ltd.: .................... PAK -- -- 0.8
TELEPHONE NETWORKS
144A GDR{.} -/- {\/} ................................... -- 4,892 $ 457,402 --
New Voucher-/- {\/} ..................................... -- 2,800 273,324 --
RailTex, Inc.-/- .......................................... US 22,200 460,650 0.5
TRANSPORTATION - ROAD & RAIL
PST Vans, Inc.-/- ......................................... US 47,500 267,188 0.3
TRANSPORTATION - ROAD & RAIL
Telecomunicacoes Brasileiras S.A. (Telebras) - 144A ADR{.}
{\/ } ................................................... BRZL 113 4,506 --
TELEPHONE NETWORKS
------------
17,820,844
------------
Capital Goods (20.7%)
Nokia AB Preferred - ADR{\/} .............................. FIN 51,000 2,843,250 3.3
TELECOM EQUIPMENT
Mannesmann AG ............................................. GER 7,500 2,469,090 2.9
MACHINERY & ENGINEERING
Caterpillar, Inc. ......................................... US 40,000 2,245,000 2.6
MACHINERY & ENGINEERING
Fluor Corp. ............................................... US 35,000 1,977,500 2.3
CONSTRUCTION
United Engineers Ltd. .................................... MAL 270,000 1,679,197 2.0
CONSTRUCTION
Allgon AB "B" Free ........................................ SWDN 100,000 1,515,037 1.8
TELECOM EQUIPMENT
Acme-Cleveland Corp. ..................................... US 63,300 1,384,688 1.6
MACHINE TOOLS
E.R.G. Ltd. .............................................. AUSL 1,100,000 1,331,861 1.5
MULTI-INDUSTRY
BroadBand Technologies, Inc.-/- ........................... US 70,100 1,226,750 1.4
TELECOM EQUIPMENT
C & P Homes, Inc.-/- ...................................... PHIL 998,200 643,566 0.7
CONSTRUCTION
Champion Technology Holdings .............................. HK 3,878,622 496,668 0.6
TELECOM EQUIPMENT
------------
17,812,607
------------
Materials/Basic Industry (15.0%)
La Cementos Nacional, C.A. - 144A GDR{.} -/- {\/} ......... ECDR 12,060 2,412,000 2.8
CEMENT
PT Bakrie and Brothers .................................... INDO 1,170,000 2,061,674 2.4
BUILDING MATERIALS & COMPONENTS
Lone Star Industries, Inc. ................................ US 75,000 1,715,625 2.0
CEMENT
Giant Cement Holding, Inc.-/- ............................. US 179,800 1,685,625 2.0
CEMENT
Siam Cement Co., Ltd. - Foreign ........................... THAI 28,000 1,526,868 1.8
CEMENT
Hylsamex, S.A. de C.V. - 144A ADR{.} -/- {\/} ............. MEX 75,000 1,265,625 1.5
METALS - STEEL
Cementos Paz del Rio S.A. - 144A ADR{.} -/- {\/} .......... COL 65,000 926,250 1.1
CEMENT
PT Semen Cibinong - Foreign ............................... INDO 316,000 828,282 1.0
CEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 79
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Grupo Simec, S.A. de C.V. - ADR-/- {\/} ................... MEX 54,200 $ 352,300 0.4
METALS - STEEL
------------
12,774,249
------------
Technology (9.3%)
DSP Communications, Inc. .................................. US 110,000 3,987,500 4.6
TELECOM TECHNOLOGY
LG Information & Communication-/- ......................... KOR 30,400 2,423,735 2.8
TELECOM TECHNOLOGY
Three-Five Systems, Inc.-/- .............................. US 90,000 1,631,249 1.9
TELECOM TECHNOLOGY
------------
8,042,484
------------
Miscellaneous (2.2%)
General Electric Co. ...................................... US 30,000 1,897,500 2.2
CONGLOMERATE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $81,114,777) ................. 81,849,210 95.2
------------ -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.9%)
Philippines (0.9%)
International Container Terminal Services, Convertible
Bond,5% due 9/15/01 - 144A (cost $1,000,000){.} ....... USD 1,000,000 810,000 0.9
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $3,235,000 U.S. Treasury Bill, due
2/8/96 (market value of collateral is $3,187,283,
including accrued interest) (cost $3,116,502). .......... 3,116,502 3.6
------------ -----
TOTAL INVESTMENTS (cost $85,231,279) ........................ 85,775,712 99.7
Other Assets and Liabilities ................................ 234,216 0.3
------------ -----
NET ASSETS .................................................. $ 86,009,928 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $86,009,928.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $85,381,279 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 8,629,590
Unrealized depreciation: (8,235,157)
-------------
Net unrealized appreciation: $ 394,433
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 80
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Short-Term
Country(Country Code/Currency Code) Equity Fixed Income & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 3.0 3.0
Australia (AUSL/AUD) ................. 1.5 1.5
Austria (ASTRI/ATS) .................. 2.0 2.0
Bolivia (BOL/BOL) .................... 2.1 2.1
Brazil (BRZL/BRL) .................... 2.0 2.0
Chile (CHLE/CLP) ..................... 2.1 2.1
Colombia (COL/COP) ................... 1.1 1.1
Czech Republic (CZCH/CSK) ........... 2.2 2.2
Ecuador (ECDR/ECS) .................. 2.8 2.8
Finland (FIN/FIM) .................... 3.3 3.3
Germany (GER/DEM) .................... 2.9 2.9
Hong Kong (HK/HKD) ................... 3.9 3.9
Indonesia (INDO/IDR) ................. 5.3 5.3
Italy (ITLY/ITL) ..................... 4.2 4.2
Japan (JPN/JPY) ...................... 2.8 2.8
Korea (KOR/KRW) ...................... 5.6 5.6
Malaysia (MAL/MYR) ................... 2.0 2.0
Mexico (MEX/MXN) ..................... 1.9 1.9
Pakistan (PAK/PKR) .................. 0.8 0.8
Philippines (PHIL/PHP) ............... 2.0 0.9 2.9
Spain (SPN/ESP) ...................... 4.7 4.7
Sweden (SWDN/SEK) .................... 4.3 4.3
Thailand (THAI/THB) .................. 1.8 1.8
United States (US/USD) ............... 30.9 3.9 34.8
------ --- --- -----
Total ............................... 95.2 0.9 3.9 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $86,009,928.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Delivery Appreciation
Contracts to Buy Dollars) Contract Price Date (Depreciation)
- ------------------------------------------------------------------------- ------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks........................................................... 852,697 1.42871 11/03/95 $ 10,987
Japanese Yen............................................................. 215,243 100.01800 11/14/95 (4,717)
Japanese Yen............................................................. 25,438 97.97301 11/14/95 (1,100)
------------- -------------
Total Contracts to Buy (Payable amount $1,088,208)....................... 1,093,378 5,170
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 1.27%
Contracts to Sell
- -------------------------------------------------------------------------
Deutsche Marks........................................................... 1,811,980 1.37700 11/03/95 39,872
Deutsche Marks........................................................... 177,898 1.45648 11/30/95 (6,251)
Italian Lira............................................................. 1,341,741 1,605.60000 11/16/95 (10,500)
Japanese Yen............................................................. 978,378 91.70000 11/14/95 112,135
Japanese Yen............................................................. 303,297 96.50400 11/14/95 17,933
------------- -------------
Total Contracts to Sell (Receivable amount $4,766,483)................... 4,613,294 153,189
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 5.36%
Total Open Forward Foreign currency Contracts, Net....................... $ 158,359
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 81
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $85,231,279)
(Note 1)............................................... $85,775,712
U.S. currency.............................. $ 499 --
Foreign currencies (cost $472,653)......... 472,692 473,191
--------
Receivable for open forward foreign currency contracts,
net (Note 1)........................................... 158,359
Dividends and dividend withholding tax reclaims
receivable............................................. 119,634
Receivable for forward foreign currency contracts --
closed (Note 1)........................................ 15,177
Interest receivable..................................... 6,389
Prepaid expenses........................................ 234
Cash held as collateral for securities loaned (Note
1)..................................................... 7,441,675
-----------
Total assets.......................................... 93,990,371
-----------
Liabilities:
Payable for investment management and administration
fees (Note 2).......................................... 505,838
Payable for professional fees........................... 14,114
Payable for custodian fees (Note 1)..................... 6,534
Payable for printing and postage expenses............... 4,250
Payable for Trustees' fees and expenses (Note 2)........ 3,992
Other accrued expenses.................................. 4,040
Collateral for securities loaned (Note 1)............... 7,441,675
-----------
Total liabilities..................................... 7,980,443
-----------
Net assets................................................ $86,009,928
-----------
-----------
Net assets consist of:
Paid in capital......................................... $84,277,905
Accumulated net investment income....................... 1,136,794
Accumulated net realized loss on investments and foreign
currency transactions.................................. (107,584)
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies...................... 158,380
Net unrealized appreciation of investments.............. 544,433
-----------
Total -- representing net assets applicable to shares of
beneficial interest outstanding.......................... $86,009,928
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$90,378).................................................. $1,008,999
Interest income............................................ 692,904
----------
Total investment income.................................. 1,701,903
----------
Expenses:
Investment management and administration fees (Note 2)..... 601,421
Custodian fees (Note 1).................................... 80,701
Legal fees................................................. 18,300
Audit fees................................................. 11,550
Trustees' fees and expenses (Note 2)....................... 7,300
Printing and postage expenses.............................. 4,250
Other expenses............................................. 3,650
----------
Total expenses before reductions......................... 727,172
----------
Expense reductions (Notes 1 & 4)....................... (37,549)
----------
Total net expenses....................................... 689,623
----------
Net investment income........................................ 1,012,280
----------
Net realized and unrealized loss on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... $ 1,032,988
Net realized loss on foreign currency
transactions.............................. (1,091,351)
-----------
Net realized loss during the year........................ (58,363)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies..................... 157,236
Net change in unrealized appreciation of
investments............................... (565,235)
-----------
Net unrealized depreciation during the year.............. (407,999)
----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (466,362)
----------
Net increase in net assets resulting from operations......... $ 545,918
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................... $ 1,012,280 $ 124,514
Net realized loss on investments and
foreign currency transactions............. (58,363) (49,221)
Net change in unrealized appreciation on
translation of assets and
liabilities in foreign currencies......... 157,236 1,144
Net change in unrealized appreciation of
investments............................... (565,235) 1,109,668
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 545,918 1,186,105
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 62,352,320 52,494,964
Withdrawals................................ (27,995,100) (2,674,379)
----------------- -----------------
Net increase from beneficial interest
transactions............................ 34,357,220 49,820,585
----------------- -----------------
Total increase in net assets................. 34,903,138 51,006,690
Net assets:
Beginning of period........................ 51,106,790 100,100
----------------- -----------------
End of period.............................. $ 86,009,928 $51,106,790
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
YEAR ENDED (COMMENCEMENT OF
OCTOBER 31, OPERATIONS) TO
1995 OCTOBER 31, 1994
----------- ------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 86,010 $ 51,107
Ratio of net investment income to
average net assets..................... 1.22% 1.44 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 0.83% 1.17 %(a)
Without expense reductions............ 0.88% -- % *
Portfolio turnover rate................. 45% 18 %
</TABLE>
- ----------------
(a) Annualized.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 85
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Infrastructure Portfolio ("Portfolio") is organized as a New York Trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The following
is a summary of significant accounting policies consistently followed by the
Portfolio in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest on each business day, with
the exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. income and
withholding taxes are translated at prevailing exchange rates when earned or
incurred.
The Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
forward foreign currency contracts, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, and the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of assets and
liabilities other than investments in securities at year end, resulting from
changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
Statement of Additional Information Page 86
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Portfolio as an unrealized gain or loss. When
the Forward Contract is closed, the Portfolio records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amounts shown in the Portfolio's "Statement of Assets and Liabilities".
The Portfolio could be exposed to risk if a counterparty is unable to meet the
terms of the contract or if the value of the currency changes unfavorably. The
Portfolio may enter into Forward Contracts in connection with planned purchases
or sales of securities, or to hedge against adverse fluctuations in exchange
rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the Portfolio hold the
underlying security and, for a put, requires the Portfolio to set aside cash,
U.S. government securities or other liquid, high-grade debt securities in an
amount not less than the exercise price or otherwise provide adequate cover at
all times while the put option is outstanding. The Portfolio may use options to
manage its exposure to the stock market and fluctuations in currency values or
interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Portfolio may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The
Statement of Additional Information Page 87
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
cost of securities sold is determined on a first-in, first-out basis, unless
otherwise specified. Dividends are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Where a high level of uncertainty
exists as to its collection, income is recorded net of all withholding tax with
any rebate recorded when received. The Portfolio may trade securities on other
than normal settlement terms. This may increase the risk if the other party to
the transaction fails to deliver and causes the Portfolio to subsequently invest
at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $7,127,333
were on loan to brokers. The loans were secured by cash collateral of
$7,441,675. For international securities, cash collateral is received by the
Portfolio against loaned securities in an amount at least equal to 105% of the
market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 103% of the market value of the
loaned securities during the period of the loan. For domestic securities, cash
collateral is received by the Portfolio against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1995, the Portfolio received $29,528 of income from
securities lending which were used to reduce the Portfolio's custodian fees.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Portfolio's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Portfolio may focus its investments in certain related
infrastructure industries, subjecting the Portfolio to greater risk than a fund
that is more diversified.
(K) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) RESTRICTED SECURITIES
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Infrastructure Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$66,417,748 and $32,256,613, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $8,021 under these arrangements.
Statement of Additional Information Page 88
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Natural Resources Fund and Board of Directors
of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Natural Resources Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1995, related statement of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for the year then ended and for the period from May 31,
1994 (commencement of operations) to October 31, 1994. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Natural Resources Fund as of October 31, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended and for the period from May 31, 1994 (commencement of
operations) to October 31, 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 89
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Natural Resources Portfolio
(cost $25,952,266) (Note 1)...................... $26,759,884
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 319,110
Unamortized organizational costs (Note 1)......... 36,854
Receivable for Fund shares sold................... 33,663
-----------
Total assets.................................... 27,149,511
-----------
Liabilities:
Payable for Fund shares repurchased............... 302,940
Payable for administration fees (Note 2).......... 74,485
Payable for printing and postage expenses......... 32,910
Payable for professional fees..................... 25,278
Payable for service and distribution expenses
(Note 2)......................................... 18,237
Payable for registration and filing fees.......... 12,148
Payable for transfer agent fees (Note 2).......... 8,635
Payable for Directors' fees and expenses (Note
2)............................................... 752
Payable for fund accounting fees (Note 2)......... 610
Other accrued expenses............................ 2,298
-----------
Total liabilities............................... 478,293
-----------
Net assets.......................................... $26,671,218
-----------
-----------
Class A:
Net asset value and redemption price per share
($12,597,970 DIVIDED BY 1,101,106 shares
outstanding)....................................... $ 11.44
-----------
-----------
Maximum offering price per share (100/95.25 of
$11.44) *.......................................... $ 12.01
-----------
-----------
Class B:+
Net asset value and offering price per share
($13,978,465 DIVIDED BY 1,230,103 shares
outstanding)....................................... $ 11.36
-----------
-----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($94,783 DIVIDED BY
8,267 shares outstanding).......................... $ 11.47
-----------
-----------
Net assets consist of:
Paid in capital (Note 3).......................... $28,316,783
Undistributed net investment income............... 47,438
Accumulated net realized loss on investments and
foreign currency transactions.................... (2,500,621)
Net unrealized depreciation on translation of
assets and liabilities in foreign
currencies -- Global Natural Resources
Portfolio........................................ (48,503)
Net unrealized appreciation of investments --
Global Natural Resources Portfolio............... 856,121
-----------
Total -- representing net assets applicable to
capital shares outstanding......................... $26,671,218
-----------
-----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 90
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Natural Resources Portfolio...... $ 437,615
Dividend income -- Global Natural Resources Portfolio...... 392,475
-----------
Total investment income.................................. 830,090
-----------
Expenses:
Expenses -- Global Natural Resources Portfolio............. 284,129
Service and distribution expenses: (Note 2)
Class A.................................. $ 73,794
Class B.................................. 149,950 223,744
-----------
Transfer agent fees (Note 2)............................... 141,492
Registration and filing fees............................... 136,100
Printing and postage expenses.............................. 120,650
Administration fees (Note 2)............................... 74,485
Audit fees................................................. 53,750
Legal fees................................................. 44,782
Directors' fees and expenses (Note 2)...................... 12,450
Amortization of organization costs (Note 1)................ 10,300
Fund accounting fees (Note 2).............................. 7,619
Other expenses............................................. 1,251
-----------
Total expenses before reductions......................... 1,110,752
-----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................... (319,110)
Expense reductions -- Global Natural Resources
Portfolio.............................................. (9,670)
-----------
Total net expenses....................................... 781,972
-----------
Net investment income........................................ 48,118
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies:
Net realized loss on investments -- Global
Natural Resources Portfolio............... (2,302,171)
Net realized loss on foreign currency
transactions -- Global Natural Resources
Portfolio................................. (89,256)
-----------
Net realized loss during the year........................ (2,391,427)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies -- Global Natural
Resources Portfolio....................... (43,764)
Net change in unrealized appreciation of
investments -- Global Natural Resources
Portfolio................................. 177,530
-----------
Net unrealized appreciation during the year.............. 133,766
-----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (2,257,661)
-----------
Net decrease in net assets resulting from operations......... $(2,209,543)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 91
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 48,118 $ 106,264
Net realized loss on investments and
foreign currency transactions -- Global
Natural Resources Portfolio............... (2,391,427) (130,259)
Net change in unrealized depreciation on
translation of assets and
liabilities in foreign currencies --
Global Natural Resources Portfolio........ (43,764) (4,739)
Net change in unrealized appreciation of
investments -- Global Natural
Resources Portfolio....................... 177,530 678,591
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (2,209,543) 649,857
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (36,529) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (30,368) --
----------------- -----------------
Total distributions...................... (66,897) --
----------------- -----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested................................ 38,611,615 34,666,146
Decrease from capital shares repurchased... (37,864,366) (7,215,594)
----------------- -----------------
Net increase from capital share
transactions............................ 747,249 27,450,552
----------------- -----------------
Total increase (decrease) in net assets...... (1,529,191) 28,100,409
Net assets:
Beginning of period........................ 28,200,409 100,000
----------------- -----------------
End of period.............................. $ 26,671,218 $28,200,409
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 92
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR
------------------------------- ------------------------------- CLASS+
MAY 31, 1994 MAY 31, 1994 -------------
(COMMENCEMENT OF (COMMENCEMENT OF JUNE 1, 1995
YEAR ENDED OPERATIONS) TO YEAR ENDED OPERATIONS) TO TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994 1995
----------- ------------------ ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.41 $ 11.43 $ 12.38 $ 11.43 $ 11.45
----------- -------- ----------- -------- -------------
Income from investment operations:
Net investment income (loss).......... 0.04* 0.06* (0.02)* 0.03* 0.11*
Net realized and unrealized gain
(loss) on investments................ (0.98) 0.92 (0.98) 0.92 (0.09)
----------- -------- ----------- -------- -------------
Net increase (decrease) from
investment operations.............. (0.94) 0.98 (1.00) 0.95 0.02
----------- -------- ----------- -------- -------------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.02) -- 0.00
----------- -------- ----------- -------- -------------
Total distributions................. (0.03) -- (0.02) -- 0.00
----------- -------- ----------- -------- -------------
Net asset value, end of period.......... $ 11.44 $ 12.41 $ 11.36 $ 12.38 $ 11.47
----------- -------- ----------- -------- -------------
----------- -------- ----------- -------- -------------
Total investment return (c)............. (7.58)% 8.57 %(b) (8.05)% 8.31 %(b) 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 12,598 $ 14,797 $ 13,978 $ 13,404 $ 95
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 0.41% 2.63 %(a) (0.09)% 2.13 %(a) 0.91%(a)
Without expense reductions and
reimbursement from G.T. Capital...... (0.69)% 0.65 %(a) (1.19)% 0.15 %(a) (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from G.T. Capital
(Notes 1 & 2)........................ 2.37% 2.40 %(a) 2.87% 2.90 %(a) 1.87%(a)
Without expense reductions and
reimbursement from G.T. Capital...... 3.47% 4.38 %(a) 3.97% 4.88 %(a) 2.97%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by G.T. Capital Management, Inc., the net
investment income (loss) per share would have been affected by $0.14,
$0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively, for the year ended October 31, 1995, and $0.04 for Class
A and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
Statement of Additional Information Page 93
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Natural Resources Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments. The Fund invests substantially all of
its investable assets in Global Natural Resources Portfolio ("Portfolio"), which
is registered as an open-end management investment company under the 1940 Act
and has investment objectives, policies and limitations substantially identical
to those of the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the Portfolio.
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this Report and should be read in
conjunction with the Fund's financial statements.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service distribution expenses, and may differ in its
transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$2,547,364, of which $91,443 expires in 2002 and $2,455,921 expires in 2003.
(C) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Portfolio and timing differences.
(D) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary items) exceed the most stringent
limits prescribed by the laws or regulations of any state in which the Fund's
shares are offered for sale, based on the average total net asset value of the
Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A, Class B, and
Advisor Class shares for purchase.
Statement of Additional Information Page 94
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1995, G.T. Global retained
$16,516 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1995, G.T. Global collected CDSCs in the amount of $73,935. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate plans of distribution with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor shares,
respectively. If necessary, this limitation will be effected by waivers by G.T.
Capital of administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $1,931 to G.T. Capital.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
Statement of Additional Information Page 95
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
3. CAPITAL SHARES
At October 31, 1995, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global High
Income Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. The shares of each of the foregoing series
of the Company were divided equally into two classes, designated Class A and
Class B common stock. With respect to the issuance of Advisor Class shares,
100,000,000 shares were classified as shares of each of the fourteen series of
the Company and designated as Advisor Class common stock. 1,400,000,000 shares
remain unclassified. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
----------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 2,262,790 $25,998,648 1,647,315 $20,040,497
Shares issued in connection with reinvestment of distributions............. 2,665 30,350 -- --
---------- ----------- --------- -----------
2,265,455 26,028,998 1,647,315 20,040,497
Shares repurchased......................................................... (2,356,872) (27,189,124) (459,166) (5,648,929)
---------- ----------- --------- -----------
Net increase (decrease).................................................... (91,417) $(1,160,126) 1,188,149 $14,391,568
---------- ----------- --------- -----------
---------- ----------- --------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
OCTOBER 31, 1995 TO OCTOBER 31, 1994
----------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 1,073,588 $12,447,266 1,205,189 $14,625,649
Shares issued in connection with reinvestment of distributions............. 2,190 24,898 -- --
---------- ----------- --------- -----------
1,075,778 12,472,164 1,205,189 14,625,649
Shares repurchased......................................................... (928,373) (10,660,475) (126,865) (1,566,665)
---------- ----------- --------- -----------
Net increase............................................................... 147,405 $ 1,811,689 1,078,324 $13,058,984
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO OCTOBER 31, 1995
-----------------------
ADVISOR CLASS SHARES AMOUNT
- --------------------------------------------------------------------------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................................ 9,525 $ 110,453
Shares issued in connection with reinvestment of distributions............. -- --
---------- -----------
9,525 110,453
Shares repurchased......................................................... (1,258) (14,767)
---------- -----------
Net increase............................................................... 8,267 $ 95,686
---------- -----------
---------- -----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.," and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.160 per share (representing an approximate total of
$394,789). The total amount of taxes paid by the Fund to such countries was
approximately $0.015 per share (representing an approximate total of $36,734).
Statement of Additional Information Page 96
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global Natural Resources Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Natural Resources Portfolio, including the schedule of Portfolio Investments, as
of October 31, 1995, the related statement of operations for the year then
ended, the statements of changes in net assets and the supplementary data for
the year then ended and for the period from May 31, 1994 (commencement of
operations) to October 31, 1994. These financial statements and the
supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1995 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Natural Resources Portfolio as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
supplementary data for the year then ended and for the period from May 31, 1994
(commencement of operations) to October 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 97
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Oil (31.3%)
Mobil Corp. ............................................... US 11,000 $ 1,108,250 4.1
British Petroleum Co., PLC ................................ UK 150,100 1,103,153 4.1
Saga Petroleum AS "A" ..................................... NOR 85,000 1,064,923 4.0
Reading & Bates Corp.-/- .................................. US 90,000 1,035,000 3.9
Repsol S.A. - ADR{\/} ..................................... SPN 34,900 1,033,913 3.9
Shell Transport & Trading Co., PLC ........................ UK 80,500 940,248 3.5
Anadarko Petroleum Corp. .................................. US 20,000 867,500 3.2
Total Compagnie Francaise des Petroles S.A. - ADR{\/} ..... FR 20,100 620,588 2.3
Norsk Hydro AS ............................................ NOR 15,175 604,485 2.3
------------
8,378,060
------------
Chemicals (12.8%)
Cytec Industries-/- ....................................... US 19,300 1,056,675 3.9
Cabot Corp. ............................................... US 21,000 997,500 3.7
Occidental Petroleum Corp. ................................ US 33,000 709,500 2.6
Potash Corporation of Saskatchewan, Inc.{\/} .............. CAN 10,000 696,250 2.6
------------
3,459,925
------------
Machinery & Engineering (9.5%)
Rauma Oy - ADR-/- {\/} ................................... FIN 45,700 993,975 3.7
Valmet Corp. "A" .......................................... FIN 32,500 903,799 3.4
Harnischfeger Industries, Inc. ........................... US 20,000 630,000 2.4
------------
2,527,774
------------
Metals - Non-Ferrous (8.2%)
Lonrho PLC ................................................ UK 400,000 986,249 3.7
Diamond Fields Resources, Inc.-/- ......................... CAN 42,800 770,962 2.9
PT Tambang Timah - 144A GDR{.} -/- {\/} ................... INDO 37,500 426,375 1.6
------------
2,183,586
------------
Forest Products (7.7%)
James River Corporation of Virginia ....................... US 30,000 963,750 3.6
Asia Pulp & Paper Co., Ltd. - ADR{\/}-/- ................. INDO 59,000 604,750 2.3
St Laurent Paperboard, Inc.-/- ........................... CAN 33,900 490,415 1.8
------------
2,058,915
------------
Metals - Steel (7.1%)
UCAR International, Inc.-/- ............................... US 41,400 1,179,900 4.4
SGL Carbon AG-/- .......................................... GER 10,900 714,894 2.7
------------
1,894,794
------------
Misc. Materials & Components (6.5%)
Broken Hill Proprietary Co., Ltd. ......................... AUSL 56,167 760,470 2.8
Anglovaal Ltd. "N" ........................................ SAFR 17,350 658,981 2.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 98
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Misc. Materials & Components (Continued)
De Beers Centenary AG - Linked Unit ....................... SAFR 11,400 $ 314,973 1.2
------------
1,734,424
------------
Gold (4.8%)
Ashanti Goldfields Co., Ltd. - GDR{\/} ................... SAFR 41,000 722,625 2.7
Acacia Resources Ltd.-/- .................................. AUSL 352,000 576,302 2.1
------------
1,298,927
------------
Food (3.2%)
IBP, Inc. ................................................. US 14,100 844,238 3.2
------------ -----
TOTAL EQUITY INVESTMENTS (cost $23,524,522) ................. 24,380,643 91.1
------------ -----
<CAPTION>
Market
Repurchase Agreement Value
- ------------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by $2,820,000 U.S. Treasury Bill, due
10/17/96 (market value of collateral is $2,675,240,
including collateralized accrued interest) (cost
$2,620,422) ............................................ 2,620,422 9.8
------------ -----
TOTAL INVESTMENTS (cost $26,144,944) ........................ 27,001,065 100.9
Other Assets and Liabilities ................................ (241,081) (0.9)
------------ -----
NET ASSETS .................................................. $ 26,759,984 100.0
------------ -----
------------ -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $26,759,984.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $26,144,944 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,790,765
Unrealized depreciation: (934,644)
-------------
Net unrealized appreciation: $ 856,121
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 99
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country (Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 4.9 4.9
Canada (CAN/CAD) ..................... 7.3 7.3
Finland (FIN/FIM) .................... 7.1 7.1
France (FR/FRF) ...................... 2.3 2.3
Germany (GER/DEM) .................... 2.7 2.7
Indonesia (INDO/IDR) ................. 3.9 3.9
Norway (NOR/NOK) ..................... 6.3 6.3
South Africa (SAFR/ZAR/ZAL) .......... 6.4 6.4
Spain (SPN/ESP) ...................... 3.9 3.9
United Kingdom (UK/GBP) .............. 11.3 11.3
United States (US/USD) ............... 35.0 8.9 43.9
------ --- -----
Total ............................... 91.1 8.9 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $26,759,984.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks................................................................ 213,478 1.42407 11/30/95 $ 2,813
Swedish Krona................................................................. 662,756 7.16200 11/22/95 48,403
------------ -------------
Total Contracts to Buy (Payable amount $825,018).......................... 876,234 51,216
------------ -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 3.27%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
Deutsche Marks................................................................ 106,739 1.45648 11/30/95 (3,750)
Deutsche Marks................................................................ 284,637 1.46545 11/30/95 (11,683)
French Francs................................................................. 409,069 5.07400 11/20/95 (14,903)
Swedish Krona................................................................. 662,756 7.41800 11/22/95 (69,605)
------------ -------------
Total Contracts to Sell (Receivable amount $1,363,260).................... 1,463,201 (99,941)
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 5.47%
Total Open Forward Foreign Currency Contracts, Net........................ $ (48,725)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 100
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$26,144,944) (Note 1 )........................... $27,001,065
Foreign currencies (cost $1,757).................. 1,771
Dividends and dividend withholding tax reclaims
receivable....................................... 43,460
-----------
Total assets.................................... 27,046,296
-----------
Liabilities:
Payable for investment management and
administration fees (Note 2)..................... 213,856
Payable for open forward foreign currency
contracts, net (Note 1).......................... 48,725
Payable for professional fees..................... 7,553
Payable for printing and postage expenses......... 4,713
Payable for Trustees' fees and expenses (Note
2)............................................... 2,801
Payable for custodian fees (Note 1)............... 2,521
Other accrued expenses............................ 6,143
-----------
Total liabilities............................... 286,312
-----------
Net assets.......................................... $26,759,984
-----------
-----------
Net assets consist of:
Paid in capital................................... $27,781,110
Accumulated net investment income................. 692,942
Accumulated net realized loss on investments and
foreign currency transactions.................... (2,521,686)
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies..... (48,503)
Net unrealized appreciation of investments........ 856,121
-----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $26,759,984
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 101
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................ $ 437,615
Dividend income (net of foreign withholding tax of
$36,734).................................................. 392,475
-----------
Total investment income.................................. 830,090
-----------
Expenses:
Investment management and administration fees (Note 2)..... 213,856
Custodian fees (Note 1).................................... 40,204
Legal fees................................................. 12,300
Audit fees................................................. 8,750
Trustees' fees and expenses (Note 2)....................... 7,119
Other expenses............................................. 1,900
-----------
Total expenses before reductions......................... 284,129
-----------
Expense reductions (Notes 1 & 4)....................... (9,670)
-----------
Total net expenses....................................... 274,459
-----------
Net investment income........................................ 555,631
-----------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized loss on investments........... $(2,302,171)
Net realized loss on foreign currency
transactions.............................. (89,256)
-----------
Net realized loss during the year........................ (2,391,427)
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (43,764)
Net change in unrealized appreciation of
investments............................... 177,530
-----------
Net unrealized appreciation during the year.............. 133,766
-----------
Net realized and unrealized loss on investments and foreign
currencies.................................................. (2,257,661)
-----------
Net decrease in net assets resulting from operations......... $(1,702,030)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 102
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income...................... $ 555,631 $ 137,311
Net realized loss on investments and
foreign currency transactions............. (2,391,427) (130,259)
Net change in unrealized depreciation on
translation of assets and
liabilities in foreign currencies......... (43,764) (4,739)
Net change in unrealized appreciation of
investments............................... 177,530 678,591
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (1,702,030) 680,904
----------------- -----------------
Beneficial interest transactions:
Contributions.............................. 34,259,648 33,302,836
Withdrawals................................ (32,747,373) (7,134,101)
----------------- -----------------
Net increase from beneficial interest
transactions............................ 1,512,275 26,168,735
----------------- -----------------
Total increase (decrease) in net assets...... (189,755) 26,849,639
Net assets:
Beginning of period........................ 26,949,739 100,100
----------------- -----------------
End of period.............................. $ 26,759,984 $26,949,739
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 103
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, 1994
OCTOBER 31, (COMMENCEMENT OF OPERATIONS)
1995 TO OCTOBER 31, 1994
----------- -----------------------------
<S> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 26,760 $ 26,950
Ratio of net investment income to
average net assets..................... 1.88% 3.47 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 0.93% 2.15 %(a)
Without expense reductions............ 0.96% -- % *
Portfolio turnover rate................. 87% 137 %
</TABLE>
- ----------------
(a) Annualized.
* Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 104
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Natural Resources Portfolio ("Portfolio") is organized as a New York
Trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest on each business day, with
the exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuations, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income and
withholding taxes are translated at prevailing exchange rates when accrued or
incurred.
The Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
forward foreign currency contracts, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, and the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of assets and
liabilities other than investments in securities at period end, resulting from
changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy
Statement of Additional Information Page 105
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
and sell a currency at a set price on a future date. The market value of the
Forward Contract fluctuates with changes in currency exchange rates. The Forward
Contract is marked-to-market daily and the change in market value is recorded by
the Portfolio as an unrealized gain or loss. When the Forward Contract is
closed, the Portfolio records a realized gain or loss equal to the difference
between the value at the time it was opened and the value at the time it was
closed. Forward Contracts involve market risk in excess of the amounts shown in
the Portfolio's "Statement of Assets and Liabilities." The Portfolio could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Portfolio may enter into
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the Portfolio holds
the underlying security and, for a put, requires the Portfolio to set aside
cash, U.S. government securities, or other liquid, high-grade debt securities in
an amount not less than the exercise price or otherwise provide adequate cover
at all times while the put option is outstanding. The Portfolio may use options
to manage its exposure to the stock market and to fluctuations in currency
values or interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Portfolio may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-
Statement of Additional Information Page 106
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
out basis, unless otherwise specified. Dividends are recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Where a high level of
uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
For international securities, cash collateral is received by the Portfolio
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Portfolio against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1995, the Portfolio received $1,364 of income from
securities lending which was used to offset the Portfolio's custody expenses.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Portfolio's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Portfolio may focus its investments in certain related natural
resources industries, subjecting the Portfolio to greater risk than a fund that
is more diversified.
(K) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) RESTRICTED SECURITIES
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Natural Resources Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$20,836,799 and $23,399,771, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the year ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the year ended October 31, 1995, the
Portfolio's expenses were reduced by $8,306 under these arrangements.
Statement of Additional Information Page 107
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Consumer Products and Services Fund and Board
of Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Consumer Products and Services Fund, one of the funds organized as a
series of G.T. Investment Funds, Inc., as of October 31, 1995, the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period from December 30, 1994 (commencement of
operations) to October 31, 1995. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1995 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Consumer Products and Services Fund as of October 31, 1995, the
results of its operations, the changes in its net assets and the financial
highlights for the period from December 30, 1994 (commencement of operations) to
October 31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 108
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Consumer Products and
Services Portfolio (cost $6,112,921) (Note 1).... $6,502,154
Receivable for Fund shares sold................... 490,612
Receivable from G.T. Capital Management, Inc.
(Note 2)......................................... 267,192
Unamortized organizational costs (Note 1)......... 42,893
----------
Total assets.................................... 7,302,851
----------
Liabilities:
Payable for organization expenses (Note 1)........ 40,263
Payable for professional fees..................... 25,016
Payable for printing and postage expenses......... 9,758
Payable for service and distribution expenses
(Note 2)......................................... 7,324
Payable for administration fees (Note 2).......... 5,933
Payable for registration and filing fees.......... 4,366
Payable for transfer agent fees (Note 2).......... 3,186
Payable for Directors' fees and expenses (Note
2)............................................... 697
Payable for fund accounting fees (Note 2)......... 123
Other accrued expenses............................ 1,210
----------
Total liabilities............................... 97,876
----------
Net assets.......................................... $7,204,975
----------
----------
Class A:
Net asset value and redemption price per share
($4,082,173 DIVIDED BY 279,721 shares
outstanding)....................................... $ 14.59
----------
----------
Maximum offering price per share (100/95.25 of
$14.59) *.......................................... $ 15.32
----------
----------
Class B:+
Net asset value and offering price per share
($2,958,974 DIVIDED BY 203,634 shares
outstanding)....................................... $ 14.53
----------
----------
Advisor Class: (Notes 1 & 3)
Net asset value, offering price per share, and
redemption price per share ($163,828 DIVIDED BY
11,194 shares outstanding)......................... $ 14.64
----------
----------
Net assets consist of:
Paid in capital (Note 3).......................... $6,418,609
Accumulated net realized gain on investments and
foreign currency transactions.................... 397,133
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies --
Global Consumer Products and Services
Portfolio........................................ 6,921
Net unrealized appreciation of investments --
Global Consumer Products and Services
Portfolio........................................ 382,312
----------
Total -- representing net assets applicable to
capital shares outstanding......................... $7,204,975
----------
----------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value less any
applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 109
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Consumer Products and Services
Portfolio.............................................. $ 37,739
Dividend income -- Global Consumer Products and Services
Portfolio.............................................. 22,144
----------
Total investment income............................... 59,883
----------
Expenses:
Expenses -- Global Consumer Products and Services
Portfolio.............................................. 54,854
Registration and filing fees............................ 101,900
Legal fees.............................................. 39,448
Audit fees.............................................. 31,280
Transfer agent fees (Note 2)............................ 29,425
Printing and postage expenses........................... 28,600
Service and distribution expenses: (Note 2)
Class A.................................. $ 8,002
Class B.................................. 7,388 15,390
--------
Directors' fees and expenses (Note 2)................... 9,520
Amortization of organization costs (Note 1)............. 8,607
Administration fees (Note 2)............................ 5,933
Fund accounting fees (Note 2)........................... 622
Other expenses.......................................... 2,014
----------
Total expenses before reductions...................... 327,593
----------
Expenses reimbursed by G.T. Capital Management, Inc.
(Note 2)............................................ (267,192)
Expense reductions -- Global Consumer Products and
Services Portfolio.................................. (1,677)
----------
Total net expenses.................................... 58,724
----------
Net investment income..................................... 1,159
----------
Net realized and unrealized gain on
investments and foreign currencies:
Net realized gain on investments -- Global
Consumer Products and Services
Portfolio................................. 402,673
Net realized loss on foreign currency
transactions -- Global Consumer Products
and Services Portfolio.................... (6,699)
--------
Net realized gain during the period................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies -- Global Consumer
Products and Services Portfolio........... 6,921
Net change in unrealized appreciation of
investments -- Global Consumer Products
and Services Portfolio.................... 382,312
--------
Net unrealized appreciation during the period......... 389,233
----------
Net realized and unrealized gain on investments and
foreign currencies....................................... 785,207
----------
Net increase in net assets resulting from operations...... $ 786,366
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 110
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
-----------------
<S> <C>
Increase in net assets
Operations:
Net investment income............................. $ 1,159
Net realized gain on investments and foreign
currency transactions -- Global Consumer Products
and Services Portfolio........................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies -- Global Consumer Products and
Services Portfolio............................... 6,921
Net change in unrealized appreciation of
investments -- Global Consumer Products and
Services
Portfolio........................................ 382,312
-----------------
Net increase in net assets resulting from
operations....................................... 786,366
-----------------
Capital share transactions: (Note 3)
Increase from capital shares sold and
reinvested....................................... 7,649,630
Decrease from capital shares repurchased.......... (1,331,021)
-----------------
Net increase from capital share transactions.... 6,318,609
-----------------
Total increase in net assets........................ 7,104,975
Net assets:
Beginning of period............................... 100,000
-----------------
End of period..................................... $ 7,204,975
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 111
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS+
------------------------------ ------------------------------ -------------
DECEMBER 30, 1994 DECEMBER 30, 1994 JUNE 1, 1995
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS) TO
TO OCTOBER 31, TO OCTOBER 31, OCTOBER 31,
1995* 1995* 1995*
------------------------------ ------------------------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.43 $ 11.84
------- ------- -------------
Income from investment operations:
Net investment income (loss).......... 0.02** (0.04)** 0.04**
Net realized and unrealized gain on
investments.......................... 3.14 3.14 2.76
------- ------- -------------
Net increase from investment
operations......................... 3.16 3.10 2.80
------- ------- -------------
Net asset value, end of period.......... $ 14.59 $ 14.53 $ 14.64
------- ------- -------------
------- ------- -------------
Total investment return (c)............. 27.65 %(b) 27.12 %(b) 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 4,082 $ 2,959 $ 164
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 0.20 %(a) (0.30)%(a) 0.70%(a)
Without expense reductions and
reimbursement by G.T. Capital........ (11.11)%(a) (11.61)%(a) (10.61)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by G.T. Capital (Notes
1 & 2)............................... 2.32 %(a) 2.82 %(a) 1.82%(a)
Without expense reductions and
reimbursement by G.T. Capital........ 13.63 %(a) 14.13 %(a) 13.13%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* These selected per share data were calculated based upon weighted
average shares outstanding during the period.
** Before reimbursement by G.T. Capital Management, Inc., net investment
income per share would have been reduced by $1.12, $1.04 and $0.61 for
Class A, Class B, and Advisor Class, respectively.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 112
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Consumer Products and Services Fund ("Fund") is a separate series of
G.T. Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments. The Fund invests substantially all of
its investable assets in Global Consumer Products and Services Portfolio
("Portfolio"), which is registered as an open-end management investment company
under the 1940 Act and has investment objectives, policies and limitations
substantially identical to those of the Fund. The value of the Fund's investment
in the Portfolio reflects the Fund's proportionate interest in the net assets of
the Portfolio. The financial statements of the Portfolio, including the
Portfolio of Investments, are included elsewhere in this Report and should be
read in conjunction with the Fund's financial statements.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held and excise tax on income
and capital gains.
(C) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Portfolio and timing differences.
(D) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary items) exceed the most stringent
limits prescribed by the laws or regulations of any state in which the Fund's
shares are offered for sale, based on the average total net asset value of the
Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with
Statement of Additional Information Page 113
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
the schedule included in the Fund's current prospectus. G.T. Global collects the
sales charges imposed on sales of Class A shares, and reallows a portion of such
charges to dealers through which the sales are made. For the period ended
October 31, 1995, G.T. Global retained $3,380 of such sales charges. G.T. Global
also makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the period ended October 31,
1995, G.T. Global collected CDSCs in the amount of $986. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate plans of distribution with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by G.T.
Capital of administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $318 to G.T. Capital.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
Statement of Additional Information Page 114
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
3. CAPITAL SHARES
At October 31, 1995, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global High
Income Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund. The shares of each of the foregoing series of the
Company were divided equally into two classes, designated Class A and Class B
common stock. With respect to the issuance of Advisor Class shares, 100,000,000
shares were classified as shares of each of the fourteen series of the Company
and designated as Advisor Class common stock. 1,400,000,000 shares remain
unclassified. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995
-----------------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------- ------------ --------------
<S> <C> <C>
Shares sold......................................... 330,327 $ 4,257,766
Shares repurchased.................................. (54,980) (746,671)
------------ --------------
Net increase........................................ 275,347 $ 3,511,095
------------ --------------
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1995
-------------------
CLASS B SHARES AMOUNT
- ---------------------------------------------------- ------- ----------
<S> <C> <C>
Shares sold......................................... 246,365 $3,239,565
Shares repurchased.................................. (47,105) (579,906)
------- ----------
Net increase........................................ 199,260 $2,659,659
------- ----------
------- ----------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF
SHARES) TO OCTOBER
31, 1995
-------------------
ADVISOR CLASS SHARES AMOUNT
- ---------------------------------------------------- ------- ----------
<S> <C> <C>
Shares sold......................................... 11,525 $ 152,299
Shares repurchased.................................. (331) (4,444)
------- ----------
Net increase........................................ 11,194 $ 147,855
------- ----------
------- ----------
</TABLE>
4. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
Statement of Additional Information Page 115
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global Consumer Products and
Services Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Consumer Products and Services Portfolio, including the portfolio of
investments, as of October 31, 1995, the related statement of operations, the
statement of changes in net assets and supplementary data for the period from
December 30, 1994 (commencement of operations) to October 31, 1995. These
financial statements and the supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and the supplementary data based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and supplementary data are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1995 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Consumer Products and Services Portfolio as of October 31, 1995, the results of
its operations, the changes in its net assets and the supplementary data for the
period from December 30, 1994 (commencement of operations) to October 31, 1995,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 116
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (36.9%)
Gucci Group - NY Registered Shares{\/} .................... ITLY 9,000 $ 270,000 4.2
TEXTILES & APPAREL
Robert Mondavi Corp. "A"-/- ............................... US 8,400 237,300 3.7
BEVERAGES - ALCOHOLIC
Fila Holding S.p.A. - ADR{\/} ............................. ITLY 5,400 232,875 3.6
TEXTILES & APPAREL
Heineken N.V. ............................................. NETH 1,225 217,361 3.3
BEVERAGES - ALCOHOLIC
Mattel, Inc. .............................................. US 7,000 201,250 3.1
TOYS
Philip Morris Cos., Inc. .................................. US 2,225 188,013 2.9
TOBACCO
Healthy Planet Products, Inc.-/- .......................... US 14,000 171,500 2.6
OTHER CONSUMER GOODS
Noble China-/- ............................................ CAN 50,400 154,290 2.4
BEVERAGES - ALCOHOLIC
St. John Knits, Inc. ...................................... US 3,000 143,625 2.2
TEXTILES & APPAREL
Amway Japan Ltd. - ADR{\/} ................................ JPN 7,500 142,500 2.2
HOUSEHOLD PRODUCTS
De Rigo S.p.A. - ADR{\/} .................................. ITLY 5,000 103,125 1.6
TEXTILES & APPAREL
Seagram Co., Ltd. ......................................... CAN 2,800 101,919 1.6
BEVERAGES - ALCOHOLIC
Gillette Co. ............................................. US 2,000 96,750 1.5
PERSONAL CARE/COSMETICS
Nike, Inc. "B" ............................................ US 1,200 68,100 1.0
TEXTILES & APPAREL
Amway Asia Pacific Ltd.{\/} ............................... HK 1,900 62,225 1.0
HOUSEHOLD PRODUCTS
------------
2,390,833
------------
Services (30.7%)
Safeway, Inc.-/- .......................................... US 4,600 217,350 3.3
RETAILERS-FOOD
Vons Cos., Inc.-/- ........................................ US 8,100 205,538 3.2
RETAILERS-FOOD
Hennes & Mauritz AB "B" Free ............................. SWDN 2,970 194,314 3.0
RETAILERS-APPAREL
Wickes PLC ................................................ UK 94,000 184,969 2.8
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. JPN 3,700 180,638 2.8
RETAILERS-APPAREL
Polygram N.V. - ADR{\/} ................................... NETH 2,900 179,800 2.8
BROADCASTING & PUBLISHING
Emmis Broadcasting Corp. "A"-/- ........................... US 6,400 169,600 2.6
BROADCASTING & PUBLISHING
Tandy Corp. ............................................... US 3,300 162,938 2.5
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 117
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
La Quinta Inns, Inc. ..................................... US 5,900 $ 151,925 2.3
LODGING
Fabri-Centers of America: ................................. US -- -- 2.0
RETAILERS-APPAREL
"A"-/- .................................................. -- 4,900 72,888 --
"B"-/- .................................................. -- 4,900 56,963 --
Aoyama Trading Co., Ltd. ................................. JPN 4,400 118,814 1.8
RETAILERS-APPAREL
Capital Cities/ABC, Inc. .................................. US 900 106,763 1.6
BROADCASTING & PUBLISHING
------------
2,002,500
------------
Consumer Durables (12.3%)
Redman Industries, Inc.-/- ............................... US 8,100 210,600 3.2
HOUSING
Belmont Homes, Inc. ....................................... US 11,500 201,250 3.1
HOUSING
Black & Decker Corp. ...................................... US 5,800 196,475 3.0
APPLIANCES & HOUSEHOLD
Nokia AB Preferred - ADR{\/} .............................. FIN 3,500 195,125 3.0
CONSUMER ELECTRONICS
------------
803,450
------------
Multi Industry/Miscellaneous (3.0%)
Malbak Ltd. ............................................... SAFR 29,000 192,856 3.0
------------
CONGLOMERATE
Health Care (2.9%)
COR Therapeutics, Inc.-/- ................................. US 10,000 103,750 1.6
BIOTECHNOLOGY
Biovail Corporation International-/- ...................... US 2,200 85,250 1.3
PHARMACEUTICALS
------------
189,000
------------
Technology (0.9%)
Brooktree Corp.-/- ........................................ US 5,000 60,000 0.9
COMPUTERS & PERIPHERALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $5,256,327) ................. 5,638,639 86.7
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.8%, collateralized by $1,180,000 U.S. Treasury Bill, due
2/08/96 (market value of collateral is $1,162,595,
including accrued interest). (cost $1,138,183) .......... 1,138,183 17.5
------------ -----
TOTAL INVESTMENTS (cost $6,394,510) ......................... 6,776,822 104.2
Other Assets and Liabilities ................................ (274,568) (4.2)
------------ -----
NET ASSETS .................................................. $ 6,502,254 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $6,502,254.
{\/} U.S. currency denominated.
-/- Non-income producing security.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 118
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<C> <S>
* For Federal income tax purposes, cost is $6,394,510 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 536,510
Unrealized depreciation: (154,198)
-------------
Net unrealized appreciation: $ 382,312
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Canada (CAN/CAD) ..................... 4.0 4.0
Finland (FIN/FIM) .................... 3.0 3.0
Hong Kong (HK/HKD) ................... 1.0 1.0
Italy (ITLY/ITL) ..................... 9.4 9.4
Japan (JPN/JPY) ...................... 6.8 6.8
Netherlands (NETH/NLG) ............... 6.1 6.1
South Africa (SAFR/ZAR) .............. 3.0 3.0
Sweden (SWDN/SEK) .................... 3.0 3.0
United Kingdom (UK/GBP) .............. 2.8 2.8
United States (US/USD) ............... 47.6 13.3 60.9
------ --- -----
Total ............................... 86.7 13.3 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $6,502,254.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell: Dollars) Price Date Appreciation
------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Japanese Yen.................................................................. 193,549 98.70000 11/24/95 $ 6,451
------------- -------------
Total Contracts to Sell (Receivable amount $200,000)...................... 193,549 6,451
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 2.98%
Total Open Forward Foreign Currency Contracts, Net........................ $ 6,451
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 119
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$5,256,327) (Note 1)............................. $5,638,639
Repurchase agreement, at value and cost (Note
1)............................................... 1,138,183
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 6,451
Dividends receivable.............................. 4,747
----------
Total assets.................................... 6,788,020
----------
Liabilities:
Payable for securities purchased.................. 192,170
Due to custodian.................................. 54,178
Payable for investment management and
administration fees (Note 2)..................... 16,284
Payable for professional fees..................... 8,405
Payable for Trustees' fees and expenses (Note
2)............................................... 6,080
Payable for printing and postage expenses......... 3,200
Payable for custodian fees (Note 1)............... 2,409
Other accrued expenses............................ 3,040
----------
Total liabilities............................... 285,766
----------
Net assets.......................................... $6,502,254
----------
----------
Net assets consist of:
Paid in capital................................... $5,710,341
Accumulated net investment income................. 6,706
Accumulated net realized gain on investments and
foreign currency transactions.................... 395,974
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 6,921
Net unrealized appreciation of investments........ 382,312
----------
Total -- representing net assets applicable to
shares of beneficial interest outstanding.......... $6,502,254
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 120
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income......................................... $ 37,739
Dividend income (net of foreign withholding tax of
$525).................................................. 22,144
--------
Total investment income............................... 59,883
--------
Expenses:
Investment management and administration fees (Note
2)..................................................... 16,284
Custodian fees (Note 1)................................. 15,890
Legal fees.............................................. 6,080
Trustees' fees and expenses (Note 2).................... 6,080
Audit fees.............................................. 4,280
Printing and postage expenses........................... 3,200
Other expenses.......................................... 3,040
--------
Total expenses before reductions...................... 54,854
--------
Expense reductions (Notes 1 & 4).................... (1,677)
--------
Total net expenses.................................... 53,177
--------
Net investment income..................................... 6,706
--------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... $402,673
Net realized loss on foreign currency
transactions.............................. (6,699)
--------
Net realized gain during the period................... 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 6,921
Net change in unrealized appreciation of
investments............................... 382,312
--------
Net unrealized appreciation during the period......... 389,233
--------
Net realized and unrealized gain on investments and
foreign currencies....................................... 785,207
--------
Net increase in net assets resulting from operations...... $791,913
--------
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 121
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
-----------------
<S> <C>
Increase in net assets
Operations:
Net investment income............................. $ 6,706
Net realized gain on investments and foreign
currency transactions............................ 395,974
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies....................................... 6,921
Net change in unrealized appreciation of
investments...................................... 382,312
-----------------
Net increase in net assets resulting from
operations....................................... 791,913
-----------------
Beneficial interest transactions:
Contributions..................................... 6,002,349
Withdrawals....................................... (392,108)
-----------------
Net increase from beneficial interest
transactions................................... 5,610,241
-----------------
Total increase in net assets........................ 6,402,154
Net assets:
Beginning of period............................... 100,100
-----------------
End of period..................................... $6,502,254
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 122
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995
------------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 6,502
Ratio of net investment income to
average net assets:.................... 0.30 %(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
4)................................... 2.37 %(a)
Without expense reductions............ 2.44 %(a)
Portfolio turnover rate................. 240 %(a)
</TABLE>
- ----------------
(a) Annualized.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 123
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Consumer Products and Services Portfolio ("Portfolio") is organized as a
New York Trust and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest on each business day, with
the exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income and
withholding taxes are translated at prevailing exchange rates when earned or
incurred.
The Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Portfolio's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
Statement of Additional Information Page 124
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contracts") is an agreement
between two parties to buy and sell a currency at a set price on a future date.
The market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Portfolio as an unrealized gain or loss. When
the Forward Contract is closed, the Portfolio records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amount shown in the Portfolio's "Statement of Assets and Liabilities."
The Portfolio could be exposed to risk if a counterparty is unable to meet the
terms of the contract or if the value of the currency changes unfavorably. The
Portfolio may enter into Forward Contracts in connection with planned purchases
or sales of securities, or to hedge against adverse fluctuations in exchange
rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the Portfolio holds
the underlying security and, for a put, requires the Portfolio to set aside
cash, U.S. government securities or other liquid, high-grade debt securities in
an amount not less than the exercise price or otherwise provide adequate cover
at all times while the put option is outstanding. The Portfolio may use options
to manage its exposure to the stock market and to fluctuations in currency
values or interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Portfolio may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
Statement of Additional Information Page 125
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
For international securities, cash collateral is received by the Portfolio
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. At
October 31, 1995, there were no securities on loan to brokers. For the period
ended October 31, 1995, the Fund received fees of $107 which were used to reduce
the Fund's custodian fees.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Portfolio's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Portfolio may focus its investments in certain related consumer
products and services industries, subjecting the Portfolio to greater risk than
a fund that is more diversified.
(K) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) RESTRICTED SECURITIES
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Consumer Products and Services Fund or G.T.
Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$8,990,298 and $4,141,883, respectively. There were no purchases or sales of
U.S. government obligations by the Portfolio for the period ended October 31,
1995.
4. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Portfolio's expenses. For the period ended October 31, 1995, the
Portfolio's expenses were reduced by $1,570 under these arrangements.
Statement of Additional Information Page 126
<PAGE>
GT GLOBAL HEALTH CARE FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Health Care Fund
and Board of Directors of G.T. Investment
Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Health Care Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Health Care Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 127
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Pharmaceuticals (38.8%)
Eli Lilly & Co. ........................................... US 200,000 $ 19,325,000 3.9
Roche Holdings AG Genusscheine ............................ SWTZ 2,500 18,173,407 3.7
Merck & Co., Inc. ......................................... US 300,000 17,250,000 3.5
Sandoz AG - Registered .................................... SWTZ 15,000 12,384,351 2.5
Bayer AG ................................................. GER 45,000 11,971,861 2.4
Pfizer, Inc. .............................................. US 200,000 11,475,000 2.3
American Home Products Corp. .............................. US 100,000 8,862,500 1.8
Elan Corp., PLC - ADR-/- {\/} ............................. IRE 200,000 8,025,000 1.6
Sanofi S.A. ............................................... FR 110,000 7,018,308 1.4
Warner-Lambert Co. ........................................ US 80,000 6,810,000 1.4
Ethical Holdings PLC - ADR{::} -/- {\/} ................... UK 730,000 6,478,750 1.3
Ares-Serono Group "B" ..................................... SWTZ 9,220 6,052,428 1.2
Takeda Chemical Industries ................................ JPN 400,000 5,635,456 1.1
Schering-Plough Corp. ..................................... US 100,000 5,362,500 1.1
SmithKline Beecham PLC - ADR Units{\/} .................... UK 100,000 5,187,500 1.0
Upjohn Co. ................................................ US 100,000 5,075,000 1.0
Sankyo Co., Ltd. .......................................... JPN 220,000 4,842,970 1.0
Allergan, Inc. ............................................ US 160,000 4,700,000 0.9
R.P. Scherer Corp.-/- ..................................... US 100,000 4,450,000 0.9
Astra AB "B" Free ......................................... SWDN 120,000 4,341,599 0.9
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 100,000 3,925,000 0.8
Roussel-Uclaf ............................................. FR 20,000 3,281,170 0.7
Santen Pharmaceutical ..................................... JPN 120,000 2,841,209 0.6
Pharmacia Aktiebolag - ADR{\/} ............................ SWDN 75,000 2,625,000 0.5
Advanced Therapeutic Systems-/- ........................... US 77,400 2,138,175 0.4
Merck KGaA-/- ............................................. GER 50,000 2,089,107 0.4
Dura Pharmaceuticals, Inc.-/- ............................. US 60,000 1,755,000 0.4
Therapeutic Discovery Corp. Units-/- ...................... US 100,000 675,000 0.1
------------
192,751,291
------------
Health Care Services (24.0%)
Pacificare Health Systems Inc.: ........................... US -- -- 5.4
"B"-/- .................................................. -- 275,000 20,006,250 --
"A"-/- .................................................. -- 100,000 7,050,000 --
United Healthcare Corp. ................................... US 200,000 10,625,000 2.1
Health Management Associates, Inc. "A"-/- ................. US 375,000 8,062,500 1.6
Columbia/HCA Healthcare Corp. ............................. US 150,000 7,368,750 1.5
Health Systems International, Inc. "A"-/- ................. US 200,000 6,075,000 1.2
Health Care & Retirement Corp.-/- ......................... US 200,000 5,875,000 1.2
Vencor, Inc.-/- ........................................... US 200,000 5,550,000 1.1
FHP International Corp.-/- ................................ US 200,000 4,850,000 1.0
HealthCare COMPARE Corp.-/- .............................. US 125,000 4,625,000 0.9
HEALTHSOUTH Corp.-/- ...................................... US 130,000 3,396,250 0.7
Coventry Corp.-/- ......................................... US 165,000 3,238,125 0.7
Wellpoint Health Networks, Inc. "A"-/- .................... US 100,000 3,050,000 0.6
Physician Reliance Network, Inc.-/- ....................... US 85,000 2,826,250 0.6
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 128
<PAGE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care Services (Continued)
Lincare Holdings, Inc.-/- ................................. US 99,000 $ 2,462,625 0.5
Apria Healthcare Group, Inc.-/- ........................... US 100,000 2,162,500 0.4
Humana, Inc.-/- ........................................... US 100,000 2,112,500 0.4
Total Renal Care Holdings, Inc.-/- ........................ US 100,000 2,037,500 0.4
Horizon/CMS Healthcare Corp.-/- ........................... US 100,000 2,025,000 0.4
Multicare Companies, Inc.-/- .............................. US 100,000 1,875,000 0.4
Cerner Corp.-/- ........................................... US 70,000 1,855,000 0.4
Owen Healthcare, Inc. .................................... US 100,000 1,825,000 0.4
Inphynet Medical Management, Inc.-/- ...................... US 100,000 1,800,000 0.4
Physicians Health Services, Inc. "A"-/- ................... US 50,000 1,662,500 0.3
Community Health Systems, Inc.-/- ......................... US 50,000 1,587,500 0.3
GranCare, Inc.-/- ........................................ US 100,000 1,462,500 0.3
Genesis Health Ventures, Inc.-/- .......................... US 44,600 1,287,825 0.3
Bergen Brunswig Corp. "A" ................................. US 50,000 1,037,500 0.2
Coastal Physician Group, Inc.-/- .......................... US 62,300 817,688 0.2
Physician Corporation of America-/- ....................... US 20,000 307,500 0.1
------------
118,916,263
------------
Medical Technology & Supplies (23.6%)
Medtronic, Inc. ........................................... US 425,000 24,543,750 4.9
Cordis Corp.-/- ........................................... US 200,000 22,100,000 4.4
Johnson & Johnson ......................................... US 225,000 18,337,500 3.7
Boston Scientific Corp.-/- ................................ US 200,000 8,425,000 1.7
Nellcor, Inc.-/- .......................................... US 128,000 7,360,000 1.5
Becton, Dickinson & Co. ................................... US 100,000 6,500,000 1.3
Target Therapeutics, Inc.-/- .............................. US 80,000 6,200,000 1.3
Fresenius AG Preferred .................................... GER 6,975 5,575,837 1.1
Amersham International PLC ................................ UK 300,000 4,556,662 0.9
MediSense, Inc.-/- ........................................ US 100,000 2,137,500 0.4
Orthologic Corp.-/- ....................................... US 200,000 1,925,000 0.4
St. Jude Medical, Inc.-/- ................................. US 30,000 1,597,500 0.3
TECNOL Medical Products, Inc.-/- .......................... US 75,000 1,425,000 0.3
Mentor Corp. .............................................. US 60,000 1,320,000 0.3
Sonus Pharmaceuticals, Inc.-/- ........................... US 150,000 1,200,000 0.2
Angeion Corp.-/- .......................................... US 150,000 1,143,750 0.2
Anesta Corp.-/- .......................................... US 100,000 1,062,500 0.2
ATS Medical, Inc.-/- ...................................... US 125,000 984,375 0.2
Maxxim Medical, Inc.-/- ................................... US 45,000 624,375 0.1
KeraVision, Inc.-/- ....................................... US 40,000 495,000 0.1
Molecular Dynamics, Inc.-/- ............................... US 80,000 480,000 0.1
------------
117,993,749
------------
Biotechnology (8.0%)
Amgen, Inc.-/- ............................................ US 300,000 14,400,000 2.9
Genzyme Corp.: ............................................ US -- -- 1.3
General Division-/- ..................................... -- 100,000 5,825,000 --
Tissue Repair Division-/- ............................... -- 13,499 241,295 --
Metra Biosystems, Inc.-/- ................................. US 200,000 3,700,000 0.7
Protein Design Labs, Inc.-/- .............................. US 200,000 3,350,000 0.7
COR Therapeutics, Inc.-/- ................................. US 300,000 3,112,500 0.6
Biochem Pharma, Inc.-/- .................................. CAN 70,000 2,677,500 0.5
Matrix Pharmaceutical, Inc.-/- ........................... US 100,000 1,450,000 0.3
Somatix Therapy Corp.-/- .................................. US 250,000 1,218,750 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 129
<PAGE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Biotechnology (Continued)
Gilead Sciences, Inc.-/- .................................. US 50,000 $ 975,000 0.2
Neurex Corp.-/- ........................................... US 200,000 950,000 0.2
Univax Biologics, Inc.-/- ................................. US 100,000 631,250 0.1
Alpha-Beta Technology, Inc.-/- ............................ US 80,000 610,000 0.1
Ribi ImmunoChem Research, Inc.-/- ......................... US 100,000 450,000 0.1
Liposome Co., Inc. Convertible Preferred "A"-/- ........... US 10,000 310,000 0.1
Enzon, Inc. Preferred ..................................... US 16,000 105,000 --
------------
40,006,295
------------ -----
TOTAL EQUITY INVESTMENTS (cost $354,468,534) ................ 469,667,598 94.4
------------ -----
<CAPTION>
No. of Market % of Net
Warrants Country Warrants Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Elan Corp. - ADR Warrants, expire 8/12/98-/- .............. US 77,400 1,122,300 0.2
PHARMACEUTICALS
ATS Medical Inc. Warrants, expire 3/2/97-/- ............... US 125,000 78,125 --
MEDICAL TECHNOLOGY & SUPPLIES
------------ -----
TOTAL WARRANTS (cost $864,953) .............................. 1,200,425 0.2
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995 with State Street Bank & Trust
Company, due November 1, 1995 for an effective yield of
5.80% collateralized by $52,180,000 U.S. Treasury Strips
due 2/15/02 (market value of collateral is $36,112,125,
including accrued interest). (cost $34,975,634) ......... 34,975,634 7.0
------------ -----
TOTAL INVESTMENTS (cost $390,309,121) ...................... 505,843,657 101.6
Other Assets and Liabilities ................................ (8,184,630) (1.6)
------------ -----
NET ASSETS .................................................. $497,659,027 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $497,659,027.
-/- Non-income producing security.
{\/} U.S. currency denominated.
{::} See Note 5 of Notes to Financial Statements.
{F} The principal amount should be read as units.
* For Federal income tax purposes, cost is $390,841,738 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 122,972,190
Unrealized depreciation: (7,970,271)
-------------
Net unrealized appreciation: $ 115,001,919
-------------
-------------
Abbreviation:
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 130
<PAGE>
GT GLOBAL HEALTH CARE FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Canada (CAN/CAD) ..................... 0.5 0.5
France (FR/FRF) ...................... 2.1 2.1
Germany (GER/DEM) .................... 3.9 3.9
Ireland (IRE/IEP) .................... 1.6 1.6
Israel (ISRL/ILS) .................... 0.8 0.8
Japan (JPN/JPY) ...................... 2.7 2.7
Sweden (SWDN/SEK) .................... 1.4 1.4
Switzerland (SWTZ/CHF) ............... 7.4 7.4
United Kingdom (UK/GBP) .............. 3.2 3.2
United States (US/USD) ............... 70.8 0.2 5.4 76.4
------ --- --- -----
Total ............................... 94.4 0.2 5.4 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $497,659,027.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Buy: Dollars) Price Date (Depreciation)
- ---------------------------------------------------------------------------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.............................................................. 1,778,980 1.42407 11/30/95 23,448
Japanese Yen................................................................ 1,237,648 97.97200 11/14/95 $ (53,537)
Japanese Yen................................................................ 753,351 100.01800 11/14/95 (16,512)
Japanese Yen................................................................ 1,029,516 99.87500 11/24/95 (21,798)
------------- -------------
Total Contracts to Buy (Payable amount $4,867,894)........................ 4,799,495 (68,399)
------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS .96%
Contracts to Sell:
Deutsche Marks.............................................................. 1,279,045 1.37700 11/03/95 28,145
Deutsche Marks.............................................................. 2,561,731 1.45648 11/30/95 (90,009)
French Francs............................................................... 1,935,154 4.81600 11/06/95 29,132
Japanese Yen................................................................ 2,152,431 91.70000 11/14/95 246,696
Japanese Yen................................................................ 3,815,674 92.70000 11/14/95 391,446
Japanese Yen................................................................ 1,907,837 96.50400 11/14/95 112,805
Japanese Yen................................................................ 1,029,516 95.10240 11/24/95 74,557
Japanese Yen................................................................ 2,456,978 96.52300 11/30/95 133,078
------------- -------------
Total Contracts to Sell (Receivable amount $18,064,216)................... 17,138,366 925,850
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 3.44%
Total Open Forward Foreign Currency Contracts, Net........................ $ 857,451
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 131
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$390,309,121) (Note 1)........................... $505,843,657
Foreign currencies (cost $5,466,965).............. 5,461,800
Receivable for securities sold.................... 13,966,323
Receivable for Fund shares sold................... 3,110,272
Receivable for open forward foreign currency
contracts, net (Note 1).......................... 857,451
Dividends and dividend withholding tax reclaims
receivable....................................... 232,677
Cash held as collateral for securities loaned
(Note 1)......................................... 24,944,125
------------
Total assets.................................... 554,416,305
------------
Liabilities:
Payable for Fund shares repurchased (Note 2)...... 25,896,723
Payable for securities purchased.................. 3,974,762
Payable for forward foreign currency contracts --
closed (Note 1).................................. 968,248
Payable for investment management and
administration fees (Note 2)..................... 416,830
Payable for service and distribution expenses
(Note 2)......................................... 242,109
Payable for transfer agent fees (Note 2).......... 124,655
Payable for printing and postage expenses......... 64,476
Payable for professional fees..................... 34,148
Payable for registration and filing fees.......... 25,618
Payable for custodian fees (Note 1)............... 14,291
Payable for fund accounting fees (Note 2)......... 10,782
Payable for Directors' fees and expenses (Note
2)............................................... 1,229
Other accrued expenses............................ 39,282
Collateral for securities loaned (Note 1)......... 24,944,125
------------
Total liabilities............................... 56,757,278
------------
Net assets.......................................... $497,659,027
------------
------------
Class A:
Net asset value and redemption price per share
($426,380,030 DIVIDED BY 19,527,021 shares
outstanding)....................................... $ 21.84
------------
------------
Maximum offering price per share (100/95.25 of
$21.84) *.......................................... $ 22.93
------------
------------
Class B:+
Net asset value and offering price per share
($70,739,602 DIVIDED BY 3,280,666 shares
outstanding)....................................... $ 21.56
------------
------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and
redemption price per share ($539,395 DIVIDED BY
24,658 shares outstanding)......................... $ 21.88
------------
------------
Net assets consist of:
Paid in capital................................... $317,402,692
Accumulated net realized gain on investments and
foreign currency transactions.................... 63,862,315
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 859,484
Net unrealized appreciation of investments........ 115,534,536
------------
Total -- representing net assets applicable to
capital shares outstanding......................... $497,659,027
------------
------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 132
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$137,619)................................................. $ 3,781,268
Interest income............................................ 1,320,732
Other income............................................... 99,687
-----------
Total investment income.................................. 5,201,687
-----------
Expenses:
Investment management and administration fees (Note 2)..... 4,453,857
Service and distribution expenses: (Note 2)
Class A.................................. $ 2,021,331
Class B.................................. 523,545 2,544,876
-----------
Transfer agent fees (Note 2)............................... 1,365,000
Printing and postage expenses.............................. 185,925
Custodian fees (Note 1).................................... 128,144
Fund accounting fees (Note 2).............................. 116,877
Registration and filing fees............................... 71,223
Audit fees................................................. 51,100
Legal fees................................................. 38,150
Directors' fees and expenses (Note 2)...................... 10,950
Insurance expenses......................................... 5,377
Other expenses............................................. 20,000
-----------
Total expenses before reductions......................... 8,991,479
-----------
Expense reductions (Notes 1 & 6)....................... (259,926)
-----------
Total net expenses....................................... 8,731,553
-----------
Net investment loss.......................................... (3,529,866)
-----------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 71,316,381
Net realized loss on foreign currency
transactions.............................. (4,272,875)
-----------
Net realized gain during the year........................ 67,043,506
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign
currencies................................ 961,568
Net change in unrealized appreciation of
investments............................... 19,234,934
-----------
Net unrealized appreciation during the year.............. 20,196,502
-----------
Net realized and unrealized gain on investments and foreign
currencies.................................................. 87,240,008
-----------
Net increase in net assets resulting from operations......... $83,710,142
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 133
<PAGE>
GT GLOBAL HEALTH CARE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment loss........................ $ (3,529,866) $ (5,648,191)
Net realized gain on investments and
foreign currency transactions............. 67,043,506 57,958,127
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... 961,568 (2,695,118)
Net change in unrealized appreciation
(depreciation) of investments............. 19,234,934 (4,582,027)
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 83,710,142 45,032,791
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (27,521,553) --
In excess of net realized gain on
investments............................... -- (1,492,549)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (2,846,079) --
In excess of net realized gain on
investments............................... -- (28,033)
----------------- -----------------
Total distributions...................... (30,367,632) (1,520,582)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,635,173,338 785,204,559
Decrease from capital shares repurchased... (1,668,897,114) (820,493,437)
----------------- -----------------
Net decrease from capital share
transactions............................ (33,723,776) (35,288,878)
----------------- -----------------
Total increase in net assets................. 19,618,734 8,223,331
Net assets:
Beginning of year.......................... 478,040,293 469,816,962
----------------- -----------------
End of year................................ $ 497,659,027 $ 478,040,293
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 134
<PAGE>
GT GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
1995 1994(D) 1993(D) 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income (loss).......... (0.15) (0.22) (0.15) (0.18) 0.03
Net realized and unrealized gain on
investments.......................... 3.73 2.02 0.57 (1.53) 6.78
----------- ----------- ----------- ----------- -----------
Net increase (decrease) from
investment operations.............. 3.58 1.80 0.42 (1.71) 6.81
----------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income............ -- -- -- -- (0.07)
From net realized gain on
investments.......................... (1.34) -- -- (0.14) (0.28)
In excess of net realized gain on
investments.......................... -- (0.06) -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions................. (1.34) (0.06) -- (0.14) (0.35)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total investment return (c)............. 19.79% 10.11% 2.4% (8.9)% 54.2%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 426,380 $ 438,940 $ 461,113 $ 655,867 $ 552,897
Ratio of net investment income (loss) to
average net assets..................... (0.72)% (1.23)% (0.90)% (0.97)% 0.19%
Ratio of expenses to average net assets:
With expense reduction................ 1.85% 1.98% 2.00% 2.05% 2.01%
Without expense reduction............. 1.91% --%* --%* --%* --%*
Portfolio turnover rate++++............. 99% 64% 61% 30% 23%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 135
<PAGE>
GT GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR
---------------------------------------- CLASS+++
-------------
YEAR ENDED OCTOBER 31, APRIL 1, 1993 JUNE 1, 1995
TO TO
----------------------- OCTOBER 31, OCTOBER 31,
1995(D) 1994(D) 1993(D) 1995
--------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.46 $ 17.80 $15.59 $18.66
--------- ----------- ------- -------------
Income from investment operations:
Net investment income (loss).......... (0.25) (0.32) (0.14) (0.02)
Net realized and unrealized gain on
investments.......................... 3.69 2.02 2.35 3.24
--------- ----------- ------- -------------
Net increase (decrease) from
investment operations.............. 3.44 1.70 2.21 3.22
--------- ----------- ------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- 0.00
From net realized gain on
investments.......................... (1.34) -- -- 0.00
In excess of net realized gain on
investments.......................... -- (0.04) -- 0.00
--------- ----------- ------- -------------
Total distributions................. (1.34) (0.04) -- 0.00
--------- ----------- ------- -------------
Net asset value, end of period.......... $ 21.56 $ 19.46 $17.80 $21.88
--------- ----------- ------- -------------
--------- ----------- ------- -------------
Total investment return (c)............. 19.17% 9.55% 14.2%(a) 17.10%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $70,740 $39,100 $8,604 $ 539
Ratio of net investment income (loss) to
average net assets..................... (1.22)% (1.73)% (1.40)%(b) (0.22)%(b)
Ratio of expenses to average net assets:
With expense reduction................ 2.35% 2.48% 2.54%(b) 1.35%(b)
Without expense reduction............. 2.41% --%* --%* 1.41%(b)
Portfolio turnover rate++++............. 99% 64% 61% 99%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 136
<PAGE>
GT GLOBAL HEALTH CARE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Health Care Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates that day. The cost of each security
is determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 137
<PAGE>
GT GLOBAL HEALTH CARE FUND
between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Fund's "Statement of Assets and Liabilities." The Fund
could be exposed to risk if a counterparty is unable to meet the terms of the
contract or if the value of the currency changes unfavorably. The Fund may enter
into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying security,
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock market and to fluctuation in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 138
<PAGE>
GT GLOBAL HEALTH CARE FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, stocks with an aggregate value of approximately $24,415,520
were on loan to brokers. The loans were secured by cash collateral of
$24,944,125. For international securities, cash collateral is received by the
Fund against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1995, the Fund received $188,401 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Fund may focus its investments in certain related health care
industries, subjecting the Fund to greater risk than a fund that is more
diversified.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securites are registered. Disposal of these securities may involve
time-consuming negotiations and expense, and prompt sale at an acceptable price
may be difficult.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees to
G.T. Capital at the annualized rate of 0.975% on the first $500 million of
average daily net assets of the Fund; 0.95% on the
Statement of Additional Information Page 139
<PAGE>
GT GLOBAL HEALTH CARE FUND
next $500 million; 0.925% on the next $500 million and 0.90% on amounts
thereafter. These fees are computed daily and paid monthly, and are subject to
reduction in any year to the extent that the Fund's expenses (exclusive of
brokerage commissions, taxes, interest, distribution-related expenses and
extraordinary expenses) exceed the most stringent limits prescribed by the laws
or regulations of any state in which the Fund's shares are offered for sale,
based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1995, G.T. Global retained
$67,325 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $3,342 for the year ended October 31, 1995. G.T. Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $178,859. In addition, G.T. Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A and Class B shares, respectively. If
necessary, this limitation will be effected by waivers by G.T. Capital of
investment management and administration fees, waivers by G.T. Global of
payments under the Class A Plan and/ or Class B Plan and/or reimbursements by
G.T. Capital or G.T. Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T. Capital
("G.T. Funds") and 0.02% to the assets in excess of $5 billion and dividing the
result by the aggregate assets of the G.T. Funds. For the period ended October
31, 1995, the Fund paid fund accounting fees of $30,660 to G.T. Capital.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus
Statement of Additional Information Page 140
<PAGE>
GT GLOBAL HEALTH CARE FUND
$300 for each meeting of the board or any committee thereof attended by the
Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$432,262,470 and $488,668,484, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year.
4. CAPITAL SHARES
At October 31, 1995, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Strategic Income Fund; 200,000,000 were classified as shares of G.T.
Global Growth & Income Fund; 200,000,000 were classifed as G.T. Global Currency
Fund (inactive); 200,000,000 were classified as shares of G.T. Latin America
Growth Fund, and 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund; 200,000,000 were classified as shares of G.T. Global
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 200,000,000 were classified as shares of G.T. Global
High Income Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. The shares of each of the foregoing series
of the Company were divided equally into two classes, designated Class A and
Class B common stock. With respect to the issuance of Advisor Class shares,
100,000,000 shares were classified as shares of each of the fourteen series of
the Company and designated as Advisor Class common stock. 1,400,000,000 shares
remain unclassified. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold................... 78,194,828 $ 1,518,869,435 34,050,013 $ 640,715,739
Shares issued in connection
with reinvestment of
distributions............... 1,197,686 21,103,166 59,903 1,108,216
----------- --------------- ----------- -------------
79,392,514 1,539,972,601 34,109,916 641,823,955
Shares repurchased............ (82,265,383) (1,598,688,749) (37,533,619) (705,605,096)
----------- --------------- ----------- -------------
Net decrease.................. (2,872,869) $ (58,716,148) (3,423,703) $ (63,781,141)
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold................... 4,710,190 $ 92,123,273 7,582,598 $ 143,354,981
Shares issued in connection
with reinvestment of
distributions............... 140,259 2,451,761 1,390 25,623
----------- --------------- ----------- -------------
4,850,449 94,575,034 7,583,988 143,380,604
Shares repurchased............ (3,578,957) $ (70,045,915) (6,058,397) (114,888,341)
----------- --------------- ----------- -------------
Net increase.................. 1,271,492 $ 24,529,119 1,525,591 $ 28,492,263
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
-----------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- ---------------
<S> <C> <C>
Shares sold................... 32,235 $ 625,703
Shares repurchased............ (7,577) (162,450)
----------- ---------------
Net increase.................. 24,658 $ 463,253
----------- ---------------
----------- ---------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to $6,478,750,
at value.
Statement of Additional Information Page 141
<PAGE>
GT GLOBAL HEALTH CARE FUND
6. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $71,525 under these arrangements.
7. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's (or Portfolio's) investment
manager and administrator, currently named G.T. Capital Management, Inc., will
be changed to "LGT Asset Management, Inc.", and G.T. Global Financial Services,
Inc., which serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$30,367,632 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 142
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of G.T. Global Telecommunications Fund and Board of
Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Telecommunications Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended and for the period from January 27, 1992 (commencement of operations)
to October 31, 1992. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Telecommunications Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period from January 27,
1992 (commencement of operations) to October 31, 1992, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1995
Statement of Additional Information Page 143
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telecom Equipment (18.8%)
Nokia AB "A" ............................................ FIN 2,452,160 $ 140,430,534 5.7
L.M. Ericsson Telephone Co.: ........................... SWDN -- -- 3.8
ADR{\/} ............................................... -- 3,509,300 74,956,437 --
"B" Free .............................................. -- 871,200 18,518,007 --
ECI Telecommunications Ltd.{\/} ......................... ISRL 3,003,500 57,066,500 2.3
DSC Communications Corp.-/- ............................. US 1,500,000 55,500,000 2.3
ANTEC Corp.{::} -/- ..................................... US 2,068,800 25,601,400 1.0
Mitel Corp.-/- {\/} ..................................... CAN 3,776,000 20,768,000 0.8
Andrew Corp.-/- ......................................... US 465,200 19,654,700 0.8
Spectrian Corp.{::} -/- ................................. US 750,000 16,312,500 0.7
Scientific-Atlanta, Inc. ................................ US 925,000 11,446,875 0.5
Champion Technology Holdings ............................ HK 73,439,163 9,404,073 0.4
BroadBand Technologies, Inc.-/- ......................... US 487,300 8,527,750 0.3
Netas Telekomunik-/- .................................... TRKY 17,820,000 6,166,992 0.2
--------------
464,353,768
--------------
Wireless Communications (16.5%)
DDI Corp. ............................................... JPN 15,049 122,058,712 4.9
Advanced Info. Service - Foreign ........................ THAI 2,386,050 37,934,022 1.5
Shinawatra Computer Company, Ltd.: ...................... THAI -- -- 1.4
Foreign ............................................... -- 1,399,100 34,254,595 --
Local ................................................ -- 31,100 761,431 --
Millicom International Cellular S.A.{::} -/- {\/} ....... LUX 1,057,000 34,881,000 1.4
AirTouch Communications, Inc.-/- ........................ US 1,000,000 28,500,000 1.2
United Communication Industry - Foreign ................. THAI 1,967,800 24,871,240 1.0
Vodafone Group PLC ...................................... UK 5,795,000 23,951,201 1.0
Grupo Iusacell, S.A. de C.V. "L" - ADR-/- {\/} .......... MEX 1,601,900 19,022,563 0.8
Telecom Italia Mobile Di Risp S.p.A.-/- ................. ITLY 16,230,000 17,892,943 0.7
Korea Mobile Telecom-/- ................................. KOR 16,500 15,947,915 0.6
Telecom Italia Mobile S.p.A. ............................ ITLY 8,365,001 14,079,965 0.6
Telephone and Data Systems, Inc. ........................ US 258,500 10,340,000 0.4
Total Access Communication Public Co., Ltd. ............. THAI -- -- 0.4
Common-/- {\/} ........................................ -- 1,125,000 6,806,250 --
144A{.} -/- {\/} ...................................... -- 286,400 1,732,720 --
Rogers Cantel Mobile Communications "B"-/- .............. CAN 382,000 7,950,609 0.3
Tele 2000 S.A.{::} -/- .................................. PERU 6,386,222 6,287,539 0.3
American Satellite Network .............................. US 65,825 -- --
--------------
407,272,705
--------------
Telephone Networks (14.2%)
Nippon Telegraph & Telephone Corp. ...................... JPN 6,120 50,236,572 2.0
Stet Di Risp ............................................ ITLY 16,820,000 36,717,190 1.5
SPT Telecom-/- ......................................... CZCH 368,000 36,244,024 1.5
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ......... MEX 1,246,750 34,285,625 1.4
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 677,800 27,027,275 1.1
Frontier Corp. .......................................... US 1,000,000 27,000,000 1.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 144
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telephone Networks (Continued)
Pakistan Telecommunications Co., Ltd. - 144A GDR{.} -/-
{\/ } ................................................. PAK 225,437 $ 21,078,360 0.9
Telefonica de Argentina S.A. - ADR{\/} .................. ARG 993,000 20,604,750 0.8
Stet Societa' Finanziaria Telefonica S.p.A. ............. ITLY 6,750,000 19,099,856 0.8
Telecom Italia - Di Risp ................................ ITLY 16,230,000 19,064,748 0.8
Telecom Argentina S.A. - ADR{\/} ........................ ARG 387,100 14,854,963 0.6
Telecom Italia S.p.A. ................................... ITLY 8,365,001 12,824,794 0.5
Russian Telecommunications Development Corp.: ........... US -- -- 0.3
Non-Voting(.) -/- ..................................... -- 453,000 4,530,000 --
Voting(.) -/- ........................................ -- 331,000 3,310,000 --
Orient Telecom & Technology Holdings Ltd.-/- ............ HK 24,682,000 7,582,232 0.3
Atlantic Tele-Network, Inc.{::} -/- ..................... US 660,100 7,261,100 0.3
TelecomAsia Corp. - Foreign-/- .......................... THAI 1,257,000 3,846,940 0.2
Jasmine International Public Co., Ltd. - Foreign ........ THAI 560,400 3,207,377 0.1
--------------
348,775,806
--------------
Broadcasting & Publishing (7.8%)
Time Warner, Inc. ....................................... US 1,150,400 41,989,600 1.7
News Corp., Ltd.: ....................................... AUSL -- -- 1.2
Common ............................................... -- 3,824,342 19,278,970 --
Preferred ............................................ -- 1,920,750 8,775,891 --
Pearson PLC ............................................. UK 1,800,000 17,923,186 0.7
Granada Group PLC ....................................... UK 1,500,000 16,050,261 0.7
Evergreen Media Corp. "A"-/- ............................ US 571,100 15,562,475 0.6
Canal Plus .............................................. FR 84,390 14,587,205 0.6
Grupo Televisa, S.A. de C.V. - GDR{\/} .................. MEX 800,000 13,700,000 0.6
Tele-Communications Liberty Media Group, Inc. "A"-/- .... US 531,800 13,095,575 0.5
Sistem Televisyen Malaysia Bhd. ......................... MAL 3,718,000 11,707,932 0.5
EchoStar Communications Corp. "A" ....................... US 605,700 8,782,650 0.4
Home Shopping Network, Inc.-/- .......................... US 568,200 4,616,625 0.2
International Broadcasting Corp., Ltd. - Foreign-/- ..... THAI 1,741,900 3,669,344 0.1
Medya Holding AS ........................................ TRKY 37,932,160 1,220,278 --
--------------
190,959,992
--------------
Cable Television (7.1%)
Comcast Corp. "A" ....................................... US 3,404,300 60,851,863 2.5
Nynex CableComms Group: ................................. UK -- -- 1.5
Units-/- ............................................. -- 15,134,000 30,617,228 --
ADR-/- {\/} ........................................... -- 306,900 6,214,725 --
TCI Group "A"-/- ........................................ US 2,127,200 36,162,400 1.5
Rogers Communications, Inc. "B"-/- ...................... CAN 2,376,400 23,288,472 0.9
Bell Cablemedia PLC - ADR{::} -/- {\/} .................. UK 738,300 10,982,213 0.4
International CableTel, Inc.-/- ......................... US 307,333 8,144,325 0.3
--------------
176,261,226
--------------
Telephone - Regional/Local (3.9%)
MFS Communications Co., Inc.-/- ........................ US 1,924,000 77,681,500 3.1
Intermedia Communications of Florida, Inc.{::} -/- ...... US 873,900 11,032,988 0.4
IntelCom Group, Inc.-/- ................................. US 974,300 10,595,513 0.4
--------------
99,310,001
--------------
Semiconductors (3.8%)
Kyocera Corp. ........................................... JPN 1,151,000 94,368,261 3.8
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 145
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Conglomerates (3.4%)
Grupo Carso, S.A. de C.V. "A1"-/- ...................... MEX 9,745,000 $ 51,051,756 2.1
Hutchison Whampoa ....................................... HK 4,800,000 26,448,675 1.1
Alfa, S.A. de C.V. ...................................... MEX 524,000 5,961,236 0.2
--------------
83,461,667
--------------
Telephone - Long Distance (3.3%)
WorldCom, Inc.-/- ....................................... US 1,107,259 36,124,325 1.5
Call-Net Enterprises, Inc.: ............................ CAN -- -- 0.6
"B"-/- ................................................ -- 1,036,700 8,514,672 --
"A"-/- ................................................ -- 519,400 4,362,913 --
144A{.} -/- ........................................... -- 379,400 3,116,105 --
LCI International, Inc.-/- .............................. US 670,000 12,060,000 0.5
GN Store Nord AS ....................................... DEN 134,166 9,946,773 0.4
Philippine Long Distance Telephone Co. ................. PHIL 86,404 4,822,394 0.2
Petersburg Long Distance, Inc.-/- {\/} ................. RUS 510,000 3,187,500 0.1
--------------
82,134,682
--------------
Telecom Technology (3.2%)
Kyushu-Matsushita Electric Co., Ltd. .................... JPN 2,557,000 40,777,908 1.7
Murata Manufacturing Co., Ltd. .......................... JPN 542,000 19,037,081 0.8
DSP Communications, Inc. ................................ US 361,800 13,115,250 0.5
Dialogic Corp.-/- ....................................... US 200,000 5,800,000 0.2
--------------
78,730,239
--------------
Machinery & Engineering (2.1%)
Mannesmann AG ........................................... GER 160,900 52,970,205 2.1
--------------
Consumer Electronics (2.0%)
Amcol Holdings Ltd. ..................................... SING 10,644,000 23,510,995 1.0
Three-Five Systems, Inc.{::} -/- ........................ US 749,000 13,575,625 0.6
Himachal Futuristic Communications Ltd. - 144A GDR{.} -/-
{\/} ................................................... IND 1,613,000 8,871,500 0.4
--------------
45,958,120
--------------
Office Equipment (1.6%)
Canon Inc. .............................................. JPN 1,600,000 27,394,580 1.1
Olivetti Group-/- ....................................... ITLY 16,413,000 12,324,176 0.5
--------------
39,718,756
--------------
Industrial Components (1.4%)
Oak Industries, Inc.-/- ................................. US 597,800 12,479,075 0.5
Alcatel Cable ........................................... FR 133,813 7,801,310 0.3
BICC PLC ................................................ UK 1,500,000 6,211,475 0.3
PT Kabelmetal Indonesia - Local-/- ...................... INDO 5,100,000 4,718,062 0.2
PT Kabelindo Murni - Local{::} .......................... INDO 4,316,000 1,901,322 0.1
PT Voksel Electronics - Foreign ......................... INDO 1,106,700 1,218,833 --
--------------
34,330,077
--------------
Aerospace/Defense (1.2%)
Orbital Sciences Corp.{::} -/- .......................... US 2,095,500 29,860,875 1.2
--------------
Real Estate (1.0%)
Wharf (Holdings) Ltd. ................................... HK 7,298,000 24,637,547 1.0
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 146
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Multi-Industry (0.9%)
Compagnie Generale des Eaux ............................. FR 142,874 $ 13,283,468 0.5
Tadiran Ltd.{\/} ........................................ ISRL 455,600 9,966,250 0.4
--------------
23,249,718
--------------
Automobiles (0.9%)
Edaran Otomobil Nasional Bhd. ........................... MAL 2,926,000 23,034,836 0.9
--------------
Software (0.9%)
Quarterdeck Corp.-/- .................................... US 1,000,000 21,375,000 0.9
--------------
Value Added Telephone Service (0.8%)
International Engineering PLC - Foreign{::} ............. THAI 3,057,700 14,583,625 0.6
Sapura Telecommunications Bhd. ......................... MAL 4,730,000 5,417,949 0.2
--------------
20,001,574
--------------
Networking (0.3%)
Cisco Systems, Inc.-/- .................................. US 85,000 6,587,500 0.3
--------------
Other Financial (0.2%)
Phatra Thanakit Co., Ltd. - Foreign ..................... THAI 619,500 4,850,616 0.2
--------------
Banks-Regional (0.2%)
Grupo Financiero Banamex Accival, S.A. de C.V. "B" ...... MEX 2,576,000 4,413,933 0.2
--------------
Computers & Peripherals (0.2%)
NEC Corp. ............................................... JPN 300,000 3,962,430 0.2
--------------
Telecom - Other (0.1%)
Radiotronica S.A.{::} -/- .............................. SPN 185,454 1,475,600 0.1
--------------
Retailers-Other (0.0%)
Gran Cadena de Almacenes Colombianos S.A. ............... COL 64,000 71,885 --
Grupo Mexicano de Video - 144A ADR{::} {.} {\/} ......... MEX 122,000 61,000 --
--------------
132,885
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $2,249,438,890) ............ 2,362,188,019 95.8
-------------- -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets {d}
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Structured Notes (0.4%)
Russia (0.4%)
Credit Suisse Synthetic Equity Medium Term Note, 3.25%
due 4/29/97 (This is an equity linked note. The value
of this note is linked to the underlying value of
Rostelecom.) ......................................... USD 7,000,000 8,530,200 0.4
--------------
Corporate Bonds (0.0%)
Malaysia (0.0%)
Sapura Telecommunications Bhd., Convertible Bond, 2%
due 9/14/00 ......................................... MYR 3,547,500 1,064,739 --
-------------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,399,408) .......... 9,594,939 0.4
-------------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 147
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Repurchase Agreement (4.0%) Value Assets {d}
- ----------------------------------------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1995, with State Street Bank & Trust
Company, due November 1, 1995, for an effective yield of
5.80% collateralized by:
$99,070,000 U.S. Treasury Bill, due 3/28/96 (market
value of collateral is $96,900,890, including accrued
interest). ........................................... $ 95,015,305 3.8
$4,770,000 U.S. Treasury Bill, due 2/8/96 (market value
of collateral is $4,699,643, including accrued
interest). ........................................... 4,598,741 0.2
-------------- -----
TOTAL REPURCHASE AGREEMENT (cost $99,614,046) ............ 99,614,046 4.0
-------------- -----
TOTAL INVESTMENTS (cost $2,357,452,344) .................. 2,471,397,004 100.2
Other Assets and Liabilities .............................. (5,473,913) (0.2)
-------------- -----
NET ASSETS ............................................... $2,465,923,091 100.0
-------------- -----
-------------- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $2,465,923,091.
-/- Non-income producing security.
{::} See Note 6 of Notes to Financial Statements.
{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
(.) Restricted securities -- At October 31, 1995, the Fund owned the
following restricted securities constituting 0.3% of net assets
which may not be publicly sold without registration under the
Securities Act of 1933 (Note 1).
Additional information on restricted securities is as follows:
Acquisition Acquisition Market Value
Description Dates Shares Cost Per Share
- --------------------------------------------------------------------------- ----------- ------- ----------- ------------
Russian Telecommunications Development Corporation:
Non-voting............................................................... 12/22/93 453,000 $ 4,530,000 $10.00
Voting................................................................... 12/22/93 331,000 3,310,000 10.00
* For Federal income tax purposes, cost is $2,362,871,101 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 402,432,461
Unrealized depreciation: (293,906,558)
-------------
Net unrealized appreciation: $ 108,525,903
-------------
-------------
</TABLE>
<TABLE>
<C> <S>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 148
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
The Fund's Portfolio of Investments at October 31, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets {d}
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country(Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) ................. 1.4 1.4
Australia (AUSL/AUD) ................. 1.2 1.2
Brazil (BRZL/BRL) .................... 1.1 1.1
Canada (CAN/CAD) ..................... 2.6 2.6
Czech Republic (CZCH/CSK) ........... 1.5 1.5
Denmark (DEN/DKK) .................... 0.4 0.4
Finland (FIN/FIM) .................... 5.7 5.7
France (FR/FRF) ...................... 1.4 1.4
Germany (GER/DEM) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 2.8 2.8
India (IND/INR) ...................... 0.4 0.4
Indonesia (INDO/IDR) ................. 0.3 0.3
Israel (ISRL/ILS) .................... 2.7 2.7
Italy (ITLY/ITL) ..................... 5.4 5.4
Japan (JPN/JPY) ...................... 14.5 14.5
Korea (KOR/KRW) ...................... 0.6 0.6
Luxembourg (LUX/ECU) ................. 1.4 1.4
Malaysia (MAL/MYR) ................... 1.6 1.6
Mexico (MEX/MXN) ..................... 5.3 5.3
Pakistan (PAK/PKR) .................. 0.9 0.9
Peru (PERU/PES) ...................... 0.3 0.3
Philippines (PHIL/PHP) ............... 0.2 0.2
Russia (RUS/SUR) ..................... 0.1 0.4 0.5
Singapore (SING/SGD) ................. 1.0 1.0
Spain (SPN/ESP) ...................... 0.1 0.1
Sweden (SWDN/SEK) .................... 3.8 3.8
Thailand (THAI/THB) .................. 5.5 5.5
Turkey (TRKY/TRL) .................... 0.2 0.2
United Kingdom (UK/GBP) .............. 4.6 4.6
United States (US/USD) ............... 26.7 3.8 30.5
------ --- --- -----
Total ............................... 95.8 0.4 3.8 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $2,465,923,091.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 149
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Contract Price Date (Depreciation)
-------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
French Francs........................................................... 10,584,003 5.06313 11/16/95 $ 364,830
Japanese Yen............................................................ 23,899,325 100.21000 11/08/95 (474,066)
Japanese Yen............................................................ 26,320,810 100.17800 11/08/95 (533,889)
Japanese Yen............................................................ 7,631,347 100.17800 11/08/95 (154,793)
Japanese Yen............................................................ 518,540 97.97300 11/14/95 (22,425)
-------------- -------------
Total Contracts to Buy (Payable amount $69,774,368)................. 68,954,025 (820,343)
-------------- -------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 2.80%
<CAPTION>
Contracts to Sell:
<S> <C> <C> <C> <C>
French Francs........................................................... 35,888,057 4.90035 11/16/95 (86,023)
Italian Lira............................................................ 59,513,181 1,605.60000 11/16/95 (465,747)
Japanese Yen............................................................ 50,220,135 90.16900 11/08/95 6,706,303
Japanese Yen............................................................ 43,762,841 96.69750 11/08/95 2,494,818
Japanese Yen............................................................ 72,693,474 89.90000 11/09/95 9,953,912
Japanese Yen............................................................ 72,204,285 91.70000 11/14/95 8,275,542
-------------- -------------
Total Contracts to Sell (Receivable amount $361,160,778)............ 334,281,973 26,878,805
-------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 13.56%
Total Open Forward Foreign Currency Contracts, Net.................. $26,058,462
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 150
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $2,357,452,344)
(Note 1)................................................. $2,471,397,004
U.S. currency.............................. $ 961 --
Foreign currencies (cost $1,379,989)....... 1,426,729 1,427,690
----------
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. 26,058,462
Receivable for securities sold............................ 22,785,737
Receivable for Fund shares sold........................... 7,809,807
Dividends and dividend withholding tax reclaims
receivable............................................... 3,462,722
Receivable for forward foreign currency contracts --
closed (Note 1).......................................... 1,266,060
Interest receivable....................................... 117,769
Unamortized organizational costs.......................... 12,074
Cash held as collateral for securities loaned (Note 1).... 151,557,635
--------------
Total assets............................................ 2,685,894,960
--------------
Liabilities:
Payable for Fund shares repurchased....................... 35,184,262
Payable for securities purchased.......................... 28,518,300
Payable for investment management and administration fees
(Note 2)................................................. 2,043,619
Payable for service and distribution expenses (Note 2).... 1,592,725
Payable for transfer agent fees (Note 2).................. 545,407
Payable for printing and postage expenses................. 322,690
Payable for custodian fees (Note 1)....................... 62,674
Payable for fund accounting fees (Note 2)................. 55,425
Payable for professional fees............................. 39,053
Payable for registration and filing fees.................. 25,202
Payable for Directors' fees and expenses (Note 2)......... 7,904
Other accrued expenses.................................... 16,973
Collateral for securities loaned (Note 1)................. 151,557,635
--------------
Total liabilities....................................... 219,971,869
--------------
Net assets.................................................. $2,465,923,091
--------------
--------------
Class A:
Net asset value and redemption price per share
($1,353,722,073 DIVIDED BY 82,457,608 shares
outstanding)............................................... $ 16.42
--------------
--------------
Maximum offering price per share (100/95.25 of $16.42) *.... $ 17.24
--------------
--------------
Class B:+
Net asset value and offering price per share ($1,111,520,240
DIVIDED BY 68,621,620 shares outstanding).................. $ 16.20
--------------
--------------
Advisor Class: (Notes 1 & 4)
Net asset value, offering price per share, and redemption
price per share ($680,778 DIVIDED BY 41,371 shares
outstanding)............................................... $ 16.46
--------------
--------------
Net assets consist of:
Paid in capital (Note 4).................................. $2,238,611,664
Accumulated net realized gain on investments and foreign
currency transactions.................................... 87,129,699
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies........................ 26,237,068
Net unrealized appreciation of investments................ 113,944,660
--------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $2,465,923,091
--------------
--------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 151
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$2,932,991)................................................. $ 25,666,862
Interest income.............................................. 7,204,936
-------------
Total investment income.................................... 32,871,798
-------------
Expenses:
Investment management and administration fees (Note 2)....... 23,861,460
Service and distribution expenses: (Note 2)
Class A.................................. $ 7,238,541
Class B.................................. 11,199,568 18,438,109
-------------
Transfer agent fees (Note 2)................................. 6,735,000
Custodian fees (Note 1)...................................... 1,462,916
Printing and postage expenses................................ 1,071,067
Fund accounting fees (Note 2)................................ 654,836
Registration and filing fees................................. 101,000
Directors' fees and expenses (Note 2)........................ 43,535
Legal fees................................................... 35,450
Insurance expenses........................................... 33,304
Amortization of organization costs (Note 1).................. 17,750
Audit fees................................................... 13,700
Other expenses............................................... 37,165
-------------
Total expenses before reductions........................... 52,505,292
-------------
Expense reductions (Notes 1 & 7)......................... (1,379,807)
-------------
Total net expenses......................................... 51,125,485
-------------
Net investment loss............................................ (18,253,687)
-------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 139,255,816
Net realized loss on foreign currency
transactions.............................. (26,974,212)
-------------
Net realized gain during the year.......................... 112,281,604
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 20,055,808
Net change in unrealized appreciation of
investments............................... (203,028,268)
-------------
Net unrealized depreciation during the year................ (182,972,460)
-------------
Net realized and unrealized loss on investments and foreign
currencies.................................................... (70,690,856)
-------------
Net decrease in net assets resulting from operations........... $ (88,944,543)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 152
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment (loss)...................... $ (18,253,687) $ (5,008,280)
Net realized gain on investments and
foreign currency transactions............. 112,281,604 137,990,064
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 20,055,808 3,578,825
Net change in unrealized appreciation
(depreciation) of investments............. (203,028,268) 27,259,645
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... (88,944,543) 163,820,254
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. -- (1,139,864)
From net realized gain on investments...... (78,594,102) (20,482,527)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. -- (511,428)
From net realized gain on investments...... (58,563,435) (9,209,255)
----------------- -----------------
Total distributions...................... (137,157,537) (31,343,074)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,799,851,047 1,678,630,071
Decrease from capital shares repurchased... (1,936,308,797) (661,298,601)
----------------- -----------------
Net increase (decrease) from capital
share transactions...................... (136,457,750) 1,017,331,470
----------------- -----------------
Total increase (decrease) in net assets...... (362,559,830) 1,149,808,650
Net assets:
Beginning of year.......................... 2,828,482,921 1,678,674,271
----------------- -----------------
End of year................................ $2,465,923,091 $2,828,482,921
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 153
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------
JANUARY 27, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------------- TO OCTOBER 31,
1995 1994(C) 1993 1992
------------ ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.80 $ 16.92 $ 11.16 $ 11.43
------------ ------------- ------------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.09) (0.01) 0.08 0.14*
Net realized and unrealized gain
(loss) on investments................ (0.43) 1.17 5.83 (0.41)
------------ ------------- ------------- -----------------
Net increase (decrease) from
investment operations.............. (0.52) 1.16 5.91 (0.27)
------------ ------------- ------------- -----------------
Distributions to shareholders:
From net investment income............ -- (0.01) (0.15) --
From net realized gain on
investments.......................... (0.86) (0.27) -- --
------------ ------------- ------------- -----------------
Total distributions................. (0.86) (0.28) (0.15) --
------------ ------------- ------------- -----------------
Net asset value, end of period.......... $ 16.42 $ 17.80 $ 16.92 $ 11.16
------------ ------------- ------------- -----------------
------------ ------------- ------------- -----------------
Total investment return (d)............. (2.88)% 7.02% 53.60% (2.40)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,353,722 $1,644,402 $1,223,340 $442,862
Ratio of net investment income (loss) to
average net assets..................... (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to average net assets
With expense reductions (Notes 1 &
7)................................... 1.77% 1.8% 2.0% 2.3%*(b)
Without expense reductions............ 1.83% --%** --%** --%**
Portfolio turnover rate++++............. 62% 57% 41% 4%(b)
</TABLE>
- ----------------
+ All capital shares issued and outstanding March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of less than $0.01. Without such reimbursement, the
annualized expense ratio would have been 2.30% and the annualized
ratio of net investment income average net assets would have been
2.04% (See Note 2).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charge.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 154
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
ADVISOR
CLASS+++
---------
CLASS B++ JUNE 1,
--------------------------------------------- 1995
APRIL 1, 1993 TO
YEAR ENDED OCTOBER 31, TO OCTOBER
---------------------------- OCTOBER 31, 31,
1995 1994(C) 1993 1995
------------ ------------- -------------- ---------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.66 $ 16.87 $ 12.68 $15.24
------------ ------------- -------------- ---------
Income from investment operations:
Net investment income (loss).......... (0.17) (0.10) 0.01 0.00
Net realized and unrealized gain
(loss) on investments................ (0.43) 1.17 4.18 1.22
------------ ------------- -------------- ---------
Net increase (decrease) from
investment operations.............. (0.60) 1.07 4.19 1.22
------------ ------------- -------------- ---------
Distributions to shareholders:
From net investment income............ -- (0.01) -- 0.00
From net realized gain on
investments.......................... (0.86) (0.27) -- 0.00
------------ ------------- -------------- ---------
Total distributions................. (0.86) (0.28) -- 0.00
------------ ------------- -------------- ---------
Net asset value, end of period.......... $ 16.20 $ 17.66 $ 16.87 $16.46
------------ ------------- -------------- ---------
------------ ------------- -------------- ---------
Total investment return (d)............. (3.37)% 6.50% 33.00%(a) 7.94%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,111,520 $1,184,081 $455,335 $ 681
Ratio of net investment income (loss) to
average net assets..................... (0.99)% (0.52)% 0.3%(b) 0.01%(b)
Ratio of expenses to average net assets
With expense reductions (Notes 1 &
7)................................... 2.27% 2.3% 2.5%(b) 1.27%(b)
Without expense reductions............ 2.33% --%** --%** 1.33%(b)
Portfolio turnover rate++++............. 62% 57% 41% 62%
</TABLE>
- ----------------
+ All capital shares issued and outstanding March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund
operating expenses of less than $0.01. Without such reimbursement, the
annualized expense ratio would have been 2.30% and the annualized
ratio of net investment income average net assets would have been
2.04% (See Note 2).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charge.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 155
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Telecommunications Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. The Fund
commenced sale of Advisor Class shares on June 1, 1995. Investment income,
realized and unrealized capital gains and losses, and the common expenses of the
Fund are allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class of shares
differs in its respective service and distribution expenses, and may differ in
its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized
Statement of Additional Information Page 156
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amount shown in the Fund's "Statement of Assets and Liabilities". The Fund could
be exposed to risk if a counterparty is unable to meet the terms of the contract
or if the value of the currency changes unfavorably. The Fund may enter into
Forward Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying security
and, for a put, requires the Fund to set aside cash, U.S. government securities
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract a
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange of which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount
Statement of Additional Information Page 157
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the underlying securities may
not correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1995, securities with an aggregate value of approximately
$137,286,521 were on loan to brokers. The loans were secured by cash collateral
of $151,557,635. For international securities, cash collateral is received by
the Fund against loaned securities in an amount at least equal to 105% of the
market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 103% of the market value of the
loaned securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1995, the Fund received $1,141,607 of income from
securities lending which was used to offset the Fund's custody expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $88,750. These expenses
are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
In addition, the Fund may focus its investments in certain related
telecommunication industries, subjecting the Fund to greater risk than a fund
that is more diversified.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price
Statement of Additional Information Page 158
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
may be difficult. At the end of the period, restricted securities (excluding
144A issues) are shown at the end of the Fund's Portfolio of Investments.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% on the first $500 million of average daily net assets of the
Fund; 0.95% on the next $500 million; 0.925% on the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A, Class B, and
Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1995, G.T. Global retained
$578,450 of such sales charges. Purchases of Class A shares exceeding $500,000
may be subject to a contingent deferred sales charge ("CDSC") upon redemption,
in accordance with the Fund's current prospectus. G.T. Global collected CDSCs in
the amount of $49,798 for the year ended October 31, 1995. G.T. Global also
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1995, G.T. Global collected CDSCs in
the amount of $4,770,375. In addition, G.T. Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expense) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by G.T.
Capital of investment management and administration fees, waivers by G.T. Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
G.T. Capital or G.T. Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Effective May 1, 1995, G.T. Capital has assumed the role of pricing and
accounting agent for the Fund. The monthly fee for these services to G.T.
Capital is a percentage, not to exceed 0.03% annually, of the Fund's average
daily net assets. The annual fee rate is derived by applying 0.03% to the first
$5 billion of assets of all registered mutual funds advised by G.T.
Statement of Additional Information Page 159
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
Capital ("G.T. Funds") and 0.02% to the assets in excess of $5 billion and
dividing the result by the aggregate assets of the G.T. Funds. For the period
ended October 31, 1995, the Fund paid fund accounting fees of $170,297 to G.T.
Capital.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$1,521,325,782 and $1,784,269,521, respectively. There were no purchases or
sales of U.S. government obligations by the Fund for the year ended October 31,
1995.
4. CAPITAL SHARES
At October 31, 1995, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 400,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; 200,000,000 were classified as shares of G.T. Global High
Income Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund. The shares of each of the foregoing series
of the Company were divided equally into two classes, designated Class A and
Class B common stock. With respect to the issuance of Advisor Class shares,
100,000,000 shares were classified as shares of each of the fourteen series of
the Company and designated as Advisor Class common stock. 1,400,000,000 shares
remain unclassified. Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 83,031,164 $ 1,357,464,500 49,183,489 $ 833,820,941
Shares issued in connection with reinvestment of distributions.......... 3,938,085 63,284,987 1,050,827 17,160,181
----------- --------------- ----------- -------------
86,969,249 1,420,749,487 50,234,316 850,981,122
Shares repurchased...................................................... (96,901,218) (1,584,327,366) (30,135,506) (509,780,043)
----------- --------------- ----------- -------------
Net increase (decrease)................................................. (9,931,969) $ (163,577,879) 20,098,810 $ 341,201,079
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 20,348,248 $ 330,809,778 48,594,410 $ 819,697,227
Shares issued in connection with reinvestment of distributions.......... 2,988,078 47,599,706 488,736 7,951,722
----------- --------------- ----------- -------------
23,336,326 378,409,484 49,083,146 827,648,949
Shares repurchased...................................................... (21,776,751) (351,935,028) (9,006,454) (151,518,558)
----------- --------------- ----------- -------------
Net increase............................................................ 1,559,575 $ 26,474,456 40,076,692 $ 676,130,391
----------- --------------- ----------- -------------
----------- --------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
SHARES) TO OCTOBER 31, 1995
----------------------------
ADVISOR CLASS: SHARES AMOUNT
----------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................................................. 44,033 $ 692,076
Shares repurchased...................................................... (2,662) (46,403)
----------- ---------------
Net increase............................................................ 41,371 $ 645,673
----------- ---------------
----------- ---------------
</TABLE>
Statement of Additional Information Page 160
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
5. WRITTEN OPTIONS
The Fund's written options contracts activity for the year ended October 31,
1995, was as follows:
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL AMOUNT
IN USD PREMIUMS
-------------- -----------
<S> <C> <C>
Options outstanding at October 31, 1994........................................................ 300,000,000 $ 8,430,000
Options written................................................................................ 0 0
Options cancelled in closing purchase transactions (loss of $4,965,000 realized)............... (300,000,000) (8,430,000)
Options expired prior to exercise.............................................................. 0 0
Options exercised.............................................................................. 0 0
-------------- -----------
Options outstanding at October 31, 1995........................................................ 0 $ 0
-------------- -----------
-------------- -----------
</TABLE>
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1995 amounted to
$173,816,787, at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ----------------------------------------------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
ANTEC Corp................................................................... $39,881,349 $ 744,751 $ (149,661) $ --
Atlantic Tele-Network, Inc................................................... 216,146 -- -- --
Bell Cablemedia PLC - ADR.................................................... 12,833,179 -- -- --
Grupo Mexicano de Video - 144A ADR........................................... -- -- -- --
Intermedia Communications of Florida, Inc.................................... -- -- -- --
International Engineering PLC - Foreign...................................... 10,064,198 -- -- --
Millicom International Cellular S.A.......................................... 4,175,625 1,186,241 316,004 --
Orbital Sciences Corp........................................................ 11,705,749 809,678 333,306 --
PT Kabelindo Murni - Local................................................... 2,403,079 -- -- 185,052
Radiotronica S.A............................................................. -- 1,291,051 (516,772) --
Spectrian Corp............................................................... 19,582,900 -- -- --
Tele 2000 S.A................................................................ 173,893 -- -- --
Three-Five Systems, Inc...................................................... 17,650,046 -- -- --
</TABLE>
7. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1995, the Fund's expenses
were reduced by $238,200 under these arrangements.
8. SUBSEQUENT EVENT:
Effective January 1, 1996, as part of a unified corporate identity effort, the
name of the BIL GT Group (of which G.T. Capital is a member) will be changed to
Liechtenstein Global Trust ("LGT"). The Fund's investment manager and
administrator, currently named G.T. Capital Management, Inc., will be changed to
"LGT Asset Management, Inc.", and G.T. Global Financial Services, Inc., which
serves as the Fund's distributor, will be known as "GT Global, Inc."
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended October 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.173 per share (representing an approximate total of
$25,368,596). The total amount of taxes paid by the Fund to such countries was
approximately $0.031 per share (representing an approximate total of
$4,523,548).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$79,742,755 as capital gain dividends for the fiscal year ended October 31,
1995.
Statement of Additional Information Page 161
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 162
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 163
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 164
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR INVESTMENT COUNSELOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
G.T. GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
G.T. GLOBAL AMERICA VALUE FUND
Concentrates of equity securities of large cap companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[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 GT INVESTMENT FUNDS, INC., GT GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, GT GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, GT GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, GT GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
GT GLOBAL HEALTH CARE FUND, GT GLOBAL TELECOMMUNICATIONS FUND, LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON IN SUCH JURISDICTION TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THESX602MC
