<PAGE>
GT GLOBAL THEME FUNDS:
ADVISOR CLASS
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
<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>
GT GLOBAL FINANCIAL SERVICES FUND ("FINANCIAL SERVICES FUND") seeks long-term
capital growth by investing all of its investable assets in the Global Financial
Services Portfolio ("Financial Services Portfolio"), which, in turn, invests
primarily in equity securities throughout the world that operate in the
financial services industries.
GT GLOBAL INFRASTRUCTURE FUND
("INFRASTRUCTURE FUND") seeks long-term capital growth by investing all of its
investable assets in the Global Infrastructure Portfolio ("Infrastructure
Portfolio"), which, 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.
GT GLOBAL NATURAL RESOURCES FUND ("NATURAL RESOURCES FUND") seeks long-term
capital growth by investing all of its investable assets in the Global Natural
Resources Portfolio ("Natural Resources Portfolio"), which, 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.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ("CONSUMER PRODUCTS AND SERVICES
FUND") seeks long-term capital growth by investing all of its investable assets
in the Global Consumer Products and Services Portfolio ("Consumer Products and
Services Portfolio"), which, in turn, invests primarily in equity securities of
companies throughout the world that manufacture, market, retail or distribute
consumer products and services.
The GT GLOBAL HEALTH CARE FUND ("HEALTH CARE FUND") seeks long-term capital
appreciation by investing primarily in equity securities of health care
companies throughout the world.
The GT GLOBAL TELECOMMUNICATIONS FUND ("TELECOMMUNICATIONS FUND") seeks
long-term growth of capital by investing primarily in equity securities of
companies throughout the world engaged in the development, manufacture or sale
of telecommunications services or equipment.
Individually, a "Fund" or "Portfolio" and, collectively, the "Funds" or the
"Portfolios."
Each Portfolio's investment objective is identical to that of its corresponding
Fund. There can be no assurance that any Fund or Portfolio will achieve its
investment objective. The investment experience of the Financial Services Fund,
the Infrastructure Fund, the Natural Resources Fund and the Consumer Products
and Services Fund will correspond directly with the investment experience of
their corresponding Portfolios.
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 Chancellor LGT
Asset Management, Inc. (the "Manager"). The Manager 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 March 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") 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 ADVISER.
[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...................................................................... 8
Investment Objectives and Policies........................................................ 16
Risk Factors.............................................................................. 24
How to Invest............................................................................. 29
How to Make Exchanges..................................................................... 31
How to Redeem Shares...................................................................... 32
Shareholder Account Manual................................................................ 34
Calculation of Net Asset Value............................................................ 35
Dividends, Other Distributions and Federal Income Taxation................................ 35
Management................................................................................ 37
Other Information......................................................................... 41
</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.
<TABLE>
<S> <C> <C>
The Funds and the Portfolios: Each Fund is a diversified series of G.T. Investment Funds, Inc.
(the "Company"). Each Portfolio is a diversified series of Global
Investment Portfolio. The Portfolios, the Health Care Fund and the
Telecommunications Fund are referred to herein as the "Theme
Portfolios."
Investment Objectives: The Financial Services Fund, the Infrastructure Fund, the Natural
Resources Fund and the 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: The Financial Services Fund invests all of its investable assets
in the Financial Services Portfolio, which, in turn, invests
primarily in equity securities of companies throughout the world
that operate in the financial services industry.
The Infrastructure Fund invests all of its investable assets in
the Infrastructure Portfolio, which, 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 Natural Resources Fund invests all of its investable assets in
the Natural Resources Portfolio, which, 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 Consumer Products and Services Fund invests all of its
investable assets in the Consumer Products and Services Portfolio,
which, in turn, invests primarily in equity securities of
companies throughout the world that manufacture, market, retail or
distribute consumer products and services.
The Health Care Fund invests primarily in equity securities of
health care companies throughout the world.
The Telecommunications Fund invests primarily in equity securities
of companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment.
Principal Risk Factors: There is no assurance that any Fund or Portfolio will achieve its
investment objective. Each Fund's net asset value will fluctuate,
reflecting fluctuations in the market value of its or its
corresponding Portfolio's portfolio holdings. 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.
Each Theme Portfolio may invest in foreign securities. 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
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
differ favorably or unfavorably from the U.S. economy. Changes in
foreign currency exchange rates will affect a Fund's net asset
value, earnings and gains and losses realized on sales of
securities. Securities of foreign companies may be less liquid and
their prices more volatile than those of securities of comparable
U.S. companies.
Each 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. Such transactions involve certain
risks and transaction costs.
The Financial Services Portfolio, the Health Care Fund and the
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.
Investments of this type are subject to a greater risk of loss of
principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
Investment Manager: The Manager is part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services
to individual and institutional investors, entrusted with
approximately $84 billion in total assets as of December 31, 1996.
The Manager and its worldwide asset management affiliates maintain
fully staffed investment offices in Frankfurt, Hong Kong, London,
New York, San Francisco, Singapore, Sydney, Tokyo and Toronto. See
"Management."
Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
Advisor Class Shares: least 1,000 employees; (b) any account with assets of at least
$10,000 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 a least $10,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies composing or affiliated with Liechtenstein Global
Trust; and (e) any of the companies composing or affiliated with
Liechtenstein Global Trust.
Shares Available Through: 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."
Exchange Privileges: Advisor Class shares of a Fund may be exchanged for Advisor Class
shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by the
Manager. See "How to Make Exchanges" and "Shareholder Account
Manual."
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Redemptions: 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."
Dividends and Other
Distributions: Dividends are paid annually from net investment income and
realized net short-term capital gain; other distributions are 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 Funds are expected to be quoted daily
in the financial section of most newspapers.
</TABLE>
Prospectus Page 5
<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 are reflected in the
following tables (1):
<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
(as a % of offering price)........................... None None None
Sales charges on reinvested distributions to
shareholders......................................... None None None
Maximum deferred sales charge (as a % of net asset
value at time of purchase or sale, whichever is
less)................................................ 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 (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......... 0.97% 0.93% 0.98%
12b-1 distribution and service fees.................... None None None
Other expenses (after reimbursements).................. 0.37% 0.36% 0.92%
------- ------- -------
Total Fund Operating Expenses.......................... 1.34% 1.29% 1.90%
------- ------- -------
------- ------- -------
<CAPTION>
GT GLOBAL
GT GLOBAL GT GLOBAL CONSUMER PRODUCTS
INFRASTRUCTURE NATURAL AND
FUND RESOURCES FUND SERVICES FUND
--------------- --------------------- -------------------
ADVISOR CLASS ADVISOR CLASS ADVISOR CLASS
--------------- --------------------- -------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(as a % of offering price)........................... None None None
Sales charges on reinvested distributions to
shareholders......................................... None None None
Maximum deferred sales charge (as a % of net asset
value at time of purchase or sale, whichever is
less)................................................ 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 (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......... 0.98% 0.98% 0.98%
12b-1 distribution and service fees.................... None None None
Other expenses......................................... 0.77% 0.82% 0.86%
------- ------- -------
Total Fund Operating Expenses.......................... 1.75% 1.80% 1.84%
------- ------- -------
------- ------- -------
</TABLE>
Prospectus Page 6
<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 $43 $ 75 $164 $13 $ 42 $ 72 $158 $ 19 $ 61 $104 $226
</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 $56 $ 96 $210 $18 $ 58 $ 99 $215 $ 18 $ 59 $101 $219
</TABLE>
- --------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. THE "HYPOTHETICAL
EXAMPLE" 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
tables and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Funds' or
the Portfolios' projected or actual performance.
(2) Expenses are based on the Funds' fiscal year ended October 31, 1996. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Without reimbursements, "Other expenses"
and "Total Fund Operating Expenses" would have been 1.91% and 2.89%,
respectively, for the Financial Services Fund and its 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 composing 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 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 each
such Fund would incur if its assets were invested directly in the type of
securities being held by its corresponding Portfolio.
Prospectus Page 7
<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, 1996, 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+
--------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------------------
1996* 1995* 1994* 1993* 1992 1991 1990
--------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
--------- --------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income
(loss)..................... (0.17) (0.15) (0.22) (0.15) (0.18) 0.03 0.06
Net realized and unrealized
gain (loss) on
investments................ 4.79 3.73 2.02 0.57 (1.53) 6.78 0.97
--------- --------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations...... 4.62 3.58 1.80 0.42 (1.71) 6.81 1.03
--------- --------- ---------- ---------- ---------- ---------- ----------
Distributions:
From net investment
income..................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.07) (0.03)
From net realized gain on
investments................ (2.86) (1.34) (0.00) (0.00) (0.14) (0.28) (0.00)
In excess of net realized
gain on investments........ (0.00) (0.00) (0.06) (0.00) (0.00) (0.00) (0.00)
--------- --------- ---------- ---------- ---------- ---------- ----------
Total distributions....... (2.86) (1.34) (0.06) (0.00) (0.14) (0.35) (0.03)
--------- --------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $ 23.60 $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83
--------- --------- ---------- ---------- ---------- ---------- ----------
--------- --------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)... 23.14% 19.79% 10.11% 2.4% (8.9)% 54.2% 8.7%
--------- --------- ---------- ---------- ---------- ---------- ----------
--------- --------- ---------- ---------- ---------- ---------- ----------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 467,861 $ 426,380 $ 438,940 $ 461,113 $ 655,867 $ 552,897 $ 145,544
Ratio of net investment income
(loss) to average net
assets....................... (0.71)% (0.72)% (1.23)% (0.9)% (0.97)% 0.19% 0.66%
Ratio of expenses to average
net assets:
With expense reduction...... 1.80% 1.85% 1.98% 2.0% 2.05% 2.01% 2.39%
Without expense reduction... 1.84% 1.91% -%(d) -%(d) -%(d) -%(d) -%(d)
Portfolio turnover rate +++... 157% 99% 64% 61% 30% 23% 34%
Average commission rate per
share paid on portfolio
transactions+++.............. $ 0.0548 N/A N/A N/A N/A N/A N/A
<CAPTION>
AUGUST 7,
1989
(COMMENCEMENT
OF
OPERATIONS)
TO OCTOBER
31, 1989
------------
<S> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.43
------------
Income from investment
operations:
Net investment income
(loss)..................... 0.01
Net realized and unrealized
gain (loss) on
investments................ 0.39
------------
Net increase (decrease) from
investment operations...... 0.40
------------
Distributions:
From net investment
income..................... (0.00)
From net realized gain on
investments................ (0.00)
In excess of net realized
gain on investments........ (0.00)
------------
Total distributions....... (0.00)
------------
Net asset value, end of
period....................... $ 11.83
------------
------------
Total investment return (c)... 3.5%(a)
------------
------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 49,903
Ratio of net investment income
(loss) to average net
assets....................... 3.2%(b)
Ratio of expenses to average
net assets:
With expense reduction...... 2.5%(b)
Without expense reduction... -%(d)
Portfolio turnover rate +++... 183%(b)
Average commission rate per
share paid on portfolio
transactions+++.............. N/A
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
+++ Portfolio turnover and average commission rates are 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.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++
-----------------------------------------
APRIL 1, ADVISOR CLASS**
1993 ------------------------------
YEAR ENDED OCTOBER 31, TO YEAR ENDED JUNE 1, 1995
---------------------------- OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1996* 1995* 1994* 1993* 1996* 1995
---------- ------- ------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 21.56 $ 19.46 $ 17.80 $ 15.59 $ 21.88 $ 18.66
---------- ------- ------- ----------- ----------- ----------------
Income from investment operations:
Net investment income (loss).................... (0.27) (0.25) (0.32) (0.14) (0.05) (0.02)
Net realized and unrealized gain (loss) on
investments.................................... 4.72 3.69 2.02 2.35 4.80 3.24
---------- ------- ------- ----------- ----------- ----------------
Net increase (decrease) from investment
operations..................................... 4.45 3.44 1.70 2.21 4.75 3.22
---------- ------- ------- ----------- ----------- ----------------
Distributions:
From net investment income...................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
From net realized gain on investments........... (2.86) (1.34) (0.00) (0.00) (2.86) (0.00)
In excess of net realized gain on investments... (0.00) (0.00) (0.04) (0.00) (0.00) (0.00)
---------- ------- ------- ----------- ----------- ----------------
Total distributions........................... (2.86) (1.34) (0.04) (0.00) (2.86) (0.00)
---------- ------- ------- ----------- ----------- ----------------
Net asset value, end of period.................... $ 23.15 $ 21.56 $ 19.46 $ 17.80 $ 23.77 $ 21.88
---------- ------- ------- ----------- ----------- ----------------
---------- ------- ------- ----------- ----------- ----------------
Total investment return (c)....................... 22.59% 19.17% 9.55% 14.2%(a) 23.82% 17.10%(a)
---------- ------- ------- ----------- ----------- ----------------
---------- ------- ------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $ 107,622 $70,740 $39,100 $ 8,604 $ 1,152 $ 539
Ratio of net investment income (loss) to average
net assets....................................... (1.21)% (1.22)% (1.73)% (1.40)%(b) (0.21)% (0.22)%(b)
Ratio of expenses to average net assets:
With expense reduction.......................... 2.30% 2.35% 2.48% 2.54%(b) 1.30% 1.35%(b)
Without expense reduction....................... 2.34% 2.41% -%(d) -%(d) 1.34% 1.41%(b)
Portfolio turnover rate +++....................... 157% 99% 64% 61% 157% 99%
Average commission rate per share paid on
portfolio transactions+++........................ $ 0.0548 N/A N/A N/A $0.0548 N/A
</TABLE>
- ------------------
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover and average commission rates are 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.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B ADVISOR CLASS+
--------------------------- --------------------------- --------------------------
DECEMBER 30, DECEMBER 30,
1994 1994
(COMMENCEMENT (COMMENCEMENT
OF OF JUNE 1, 1995
YEAR ENDED OPERATIONS) YEAR ENDED OPERATIONS) YEAR ENDED TO
OCTOBER 31, TO OCTOBER OCTOBER 31, TO OCTOBER OCTOBER 31, OCTOBER 31,
1996* 31, 1995* 1996* 31, 1995* 1996* 1995*
----------- ------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 14.59 $ 11.43 $ 14.53 $ 11.43 $ 14.64 $ 11.84
----------- ------------- ----------- ------------- ----------- ------------
Income from investment operations:
Net investment income (loss)..... (0.22)*** 0.02** (0.31)*** (0.04)** (0.13)*** 0.04**
Net realized and unrealized gain
on investments.................. 7.13 3.14 7.09 3.14 7.16 2.76
----------- ------------- ----------- ------------- ----------- ------------
Net increase from investment
operations...................... 6.91 3.16 6.78 3.10 7.03 2.80
----------- ------------- ----------- ------------- ----------- ------------
Distributions:
From net realized gain on
investments..................... (0.52) (0.00) (0.52) (0.00) (0.52) (0.00)
----------- ------------- ----------- ------------- ----------- ------------
Total distributions............ (0.52) (0.00) (0.52) (0.00) (0.52) (0.00)
----------- ------------- ----------- ------------- ----------- ------------
Net asset value, end of period..... $ 20.98 $ 14.59 $ 20.79 $ 14.53 $ 21.15 $ 14.64
----------- ------------- ----------- ------------- ----------- ------------
----------- ------------- ----------- ------------- ----------- ------------
Total investment return (c)........ 48.82% 27.65%(b) 48.11% 27.12%(b) 49.50% 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $76,900 $ 4,082 $87,904 $ 2,959 $ 7,446 $ 164
Ratio of net investment income
(loss) to average net assets:
With expense reductions and
reimbursement by the Manager.... (1.14)% 0.20%(a) (1.64)% (0.30)%(a) (0.64)% 0.70%(a)
Without expense reductions and
reimbursement by the Manager.... (1.24)% (11.11)%(a) (1.74)% (11.61)%(a) (0.74)% (10.61)%(a)
Ratio of expenses to average net
assets:
With expense reductions and
reimbursement by the Manager.... 2.24% 2.32%(a) 2.74% 2.82%(a) 1.74% 1.82%(a)
Without expense reductions and
reimbursement by the Manager.... 2.34% 13.63%(a) 2.84% 14.13%(a) 1.84% 13.13%(a)
Portfolio Turnover Rate++.......... 169% 240%(a) 169% 240%(a) 169% 240%(a)
Average commission rate per share
paid on portfolio
transactions++.................... $0.0545 N/A $0.0545 N/A $ 0.0545 N/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.
++ Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the classes of shares
issued. The Fund invests only in the Consumer Products and Services
Portfolio and does not engage in securities transactions. Accordingly, the
portfolio turnover and average commission rates presented are for the
Consumer Products and Services Portfolio.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
** Before reimbursement by the Manager, 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.
*** Before reimbursement by the Manager, net investment income per share would
have been reduced by $0.05 for each of the three classes.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------------
JANUARY 27, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------------------- OPERATIONS) TO
1996(C) 1995 1994(C) 1993 OCTOBER 31, 1992
---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........................ $ 16.42 $ 17.80 $ 16.92 $ 11.16 $ 11.43
---------- ---------- ---------- ---------- ----------------
Income from investment operations:
Net investment income (loss).............................. (0.13) (0.09) (0.01) 0.08 0.14*
Net realized and unrealized gain (loss) on investments.... 1.22 (0.43) 1.17 5.83 (0.41)
---------- ---------- ---------- ---------- ----------------
Net increase (decrease) from investment operations........ 1.09 (0.52) 1.16 5.91 (0.27)
---------- ---------- ---------- ---------- ----------------
Distributions:
From net investment income................................ (0.00) (0.00) (0.01) (0.15) (0.00)
From net realized gain on investments..................... (0.82) (0.86) (0.27) (0.00) (0.00)
---------- ---------- ---------- ---------- ----------------
Total distributions..................................... (0.82) (0.86) (0.28) (0.15) (0.00)
---------- ---------- ---------- ---------- ----------------
Net asset value, end of period.............................. $ 16.69 $ 16.42 $ 17.80 $ 16.92 $ 11.16
---------- ---------- ---------- ---------- ----------------
---------- ---------- ---------- ---------- ----------------
Total investment return (d)................................. 7.00% (2.88)% 7.02% 53.6% (2.4)%(a)
---------- ---------- ---------- ---------- ----------------
---------- ---------- ---------- ---------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's)........................ $1,204,428 $1,353,722 $1,644,402 $1,223,340 $ 442,862
Ratio of net investment income to average net assets........ (0.84)% (0.49)% (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to average net assets:
With expense reductions................................... 1.74% 1.77% 1.8% 2.0% 2.3%*(b)
Without expense reductions................................ 1.79% 1.83% -%(e) -%(e) -%(e)
Portfolio turnover rate++................................... 37% 62% 57% 41% 4%(b)
Average commission rate per share paid on portfolio
transactions++............................................. $ 0.0165 N/A N/A N/A N/A
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the classes of shares
issued.
* Includes reimbursement by the Manager of Fund operating expenses of less
than $0.01. Without such reimbursement, the annualized expense ratio would
have been 2.30% and the annualized ratio of net investment income to average
net assets would have been 2.04%.
(a) Not annualized.
(b) Annualized.
(c) These per share operating performance data were calculated based upon
weighted average shares outstanding during the year.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
Prospectus Page 11
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS**
--------------------------------------------- ---------------------------
APRIL 1, JUNE 1, 1995
YEAR ENDED OCTOBER 31, 1993 TO YEAR ENDED TO
-------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996(C) 1995 1994(C) 1993 1996(C) 1995
-------- ---------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 16.20 $ 17.66 $ 16.87 $ 12.68 $ 16.46 $ 15.24
-------- ---------- ---------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).................... (0.23) (0.17) (0.10) 0.01 (0.05) 0.00
Net realized and unrealized gain (loss) on
investments.................................... 1.22 (0.43) 1.17 4.18 1.22 1.22
-------- ---------- ---------- ----------- ----------- -------------
Net increase (decrease) from investment
operations..................................... 0.99 (0.60) 1.07 4.19 1.17 1.22
-------- ---------- ---------- ----------- ----------- -------------
Distributions:
From net investment income...................... (0.00) (0.00) (0.01) (0.00) (0.00) (0.00)
From net realized gain on investments........... (0.82) (0.86) (0.27) (0.00) (0.82) (0.00)
-------- ---------- ---------- ----------- ----------- -------------
Total distributions........................... (0.82) (0.86) (0.28) (0.00) (0.82) (0.00)
-------- ---------- ---------- ----------- ----------- -------------
Net asset value, end of period.................... $ 16.37 $ 16.20 $ 17.66 $ 16.87 $ 16.81 $ 16.46
-------- ---------- ---------- ----------- ----------- -------------
-------- ---------- ---------- ----------- ----------- -------------
Total investment return (d)....................... 6.46% (3.37)% 6.50% 33.0%(a) 7.49% 7.94%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $1,007,654 $1,111,520 $1,184,081 $ 455,335 $ 945 $ 681
Ratio of net investment income to average net
assets........................................... (1.34)% (0.99)% (0.52)% 0.3%(b) (0.34)% 0.01%(b)
Ratio of expenses to average net assets:
With expense reductions......................... 2.24% 2.27% 2.3% 2.5%(b) 1.24% 1.27%(b)
Without expense reductions...................... 2.29% 2.33% -%(e) -%(e) 1.29% 1.33%(b)
Portfolio turnover rate+++........................ 37% 62% 57% 41% 37% 62%
Average commission rate per share paid on
portfolio transactions+++........................ $ 0.0165 N/A N/A N/A $ 0.0165 N/A
</TABLE>
- --------------
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the classes of shares
issued.
** 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.
N/A Not applicable.
Prospectus Page 12
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------------- --------------------------------------
MAY 31, MAY 31,
1994 1994
(COMMENCEMENT (COMMENCEMENT
OF OF
YEAR ENDED OPERATIONS) YEAR ENDED OPERATIONS)
OCTOBER 31, TO OCTOBER 31, TO
------------------------- OCTOBER ------------------------- OCTOBER
1996(D) 1995(D) 31, 1994 1996(D) 1995(D) 31, 1994
----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 11.92 $ 11.62 $ 11.43 $ 11.83 $ 11.60 $ 11.43
----------- ----------- ---------- ----------- ----------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05* 0.17* 0.02* (0.01)* 0.11* 0.00*
Net realized and unrealized gain
(loss) on investments................ 2.36 0.13 0.17 2.34 0.12 0.17
----------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) from investment
operations............................. 2.41 0.30 0.19 2.33 0.23 0.17
----------- ----------- ---------- ----------- ----------- ----------
Distributions:
From net investment income............ (0.12) (0.00) (0.00) (0.09) (0.00) (0.00)
From net realized gain on
investments.......................... (0.01) (0.00) (0.00) (0.01) (0.00) (0.00)
----------- ----------- ---------- ----------- ----------- ----------
Total distributions................. (0.13) (0.00) (0.00) (0.10) (0.00) (0.00)
----------- ----------- ---------- ----------- ----------- ----------
Net asset value, end of period.......... $ 14.20 $ 11.92 $ 11.62 $ 14.06 $ 11.83 $ 11.60
----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ---------- ----------- ----------- ----------
Total investment return (b)............. 20.21% 2.58% 1.66%(c) 19.81% 1.98% 1.49%(c)
----------- ----------- ---------- ----------- ----------- ----------
----------- ----------- ---------- ----------- ----------- ----------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $ 7,302 $ 5,687 $ 3,175 $ 9,886 $ 4,548 $ 2,235
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from the
Manager.............................. 0.41% 1.46% 0.66%(a) (0.09)% 0.96% 0.16%(a)
Without expense reductions and
reimbursement from the
Manager.............................. (0.66)% (5.34)% (7.26)%(a) (1.16)% (5.84)% (7.76)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from the
Manager.............................. 2.32% 2.34% 2.40%(a) 2.82% 2.84% 2.90%(a)
Without expense reductions and
reimbursement from the
Manager.............................. 3.39% 9.14% 10.32%(a) 3.89% 9.64% 10.82%(a)
Portfolio Turnover Rate++............... 103% 170% 53%(a) 103% 170% 53%(a)
Average commission rate per share paid
on portfolio transaactions++........... $ 0.0080 N/A N/A $ 0.0080 N/A N/A
<CAPTION>
ADVISOR CLASS+
-------------------------
YEAR ENDED JUNE 1, 1995
OCTOBER TO
31, OCTOBER 31,
1996(D) 1995
---------- ------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 11.95 $ 11.09
---------- ------------
Income from investment operations:
Net investment income (loss).......... 0.12* 0.09*
Net realized and unrealized gain
(loss) on investments................ 2.36 0.77
---------- ------------
Net increase (decrease) from investment
operations............................. 2.48 0.86
---------- ------------
Distributions:
From net investment income............ (0.16) (0.00)
From net realized gain on
investments.......................... (0.01) (0.00)
---------- ------------
Total distributions................. (0.17) (0.00)
---------- ------------
Net asset value, end of period.......... $ 14.26 $ 11.95
---------- ------------
---------- ------------
Total investment return (b)............. 20.87% 7.75%(c)
---------- ------------
---------- ------------
Ratios and supplemental data:
Net assets, end of period
(in 000's)............................. $ 72 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement from the
Manager.............................. 0.91% 1.96%(a)
Without expense reductions and
reimbursement from the
Manager.............................. (0.16)% (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement from the
Manager.............................. 1.82% 1.84%(a)
Without expense reductions and
reimbursement from the
Manager.............................. 2.89% 8.64%(a)
Portfolio Turnover Rate++............... 103% 170%
Average commission rate per share paid
on portfolio transaactions++........... $ 0.0080 N/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 the Manager, the net investment income per share
would have been reduced by $0.13 for each of the three classes for the year
ended October 31, 1996, $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.
++ Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the class of shares
issued. The Fund invests only in the Financial Services Portfolio and does
not engage in securities transactions. Accordingly, the portfolio turnover
and average commission rates presented are for the Financial Services
Portfolio.
N/A Not applicable.
Prospectus Page 13
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------------------- ------------------------------------------
MAY 31, 1994 MAY 31, 1994
YEAR ENDED (COMMENCEMENT YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS) OCTOBER 31, OF OPERATIONS)
------------------------- TO ----------------------- TO
1996(D) 1995 OCTOBER 31, 1994 1996(D) 1995 OCTOBER 31, 1994
----------- ----------- ---------------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 12.11 $ 12.47 $ 11.43 $ 12.03 $ 12.45 $ 11.43
----------- ----------- -------- ---------- ---------- --------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.03)* 0.01* (0.09) (0.09)* (0.01)*
Net realized and unrealized gain
(loss) on investments................ 2.34 (0.33) 1.03 2.30 (0.33) 1.03
----------- ----------- -------- ---------- ---------- --------
Net increase (decrease) from
investment operations................ 2.31 (0.36) 1.04 2.21 (0.42) 1.02
----------- ----------- -------- ---------- ---------- --------
Net asset value, end of period.......... $ 14.42 $ 12.11 $ 12.47 $ 14.24 $ 12.03 $ 12.45
----------- ----------- -------- ---------- ---------- --------
----------- ----------- -------- ---------- ---------- --------
Total investment return (c)............. 19.08% (2.89)% 9.10%(b) 18.37% (3.37)% 8.92%(b)
----------- ----------- -------- ---------- ---------- --------
----------- ----------- -------- ---------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 38,397 $ 36,241 $23,615 $ 53,678 $ 50,181 $30,954
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by the Manager......... (0.19)% (0.32)% 0.41%(a) (0.69)% (0.82)% (0.09)%(a)
Without expense reductions and
reimbursement by the Manager......... (0.30)% (0.58)% (0.47)%(a) (0.80)% (1.08)% (0.97)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by the Manager......... 2.14% 2.36% 2.40%(a) 2.64% 2.86% 2.90%(a)
Without expense reductions and
reimbursement by the Manager......... 2.25% 2.62% 3.28%(a) 2.75% 3.12% 3.78%(a)
Portfolio Turnover Rate++............... 41% 45% 18% 41% 45% 18%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0109 N/A N/A $ 0.0109 N/A N/A
<CAPTION>
ADVISOR CLASS+
------------------------------
JUNE 1, 1995
YEAR ENDED TO
OCTOBER 31, OCTOBER 31,
1996(D) 1995
----------- ----------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period................................. $ 12.14 $ 12.00
----------- --------
Income from investment operations:
Net investment income (loss).......... 0.04 0.02*
Net realized and unrealized gain
(loss) on investments................ 2.34 0.12
----------- --------
Net increase (decrease) from
investment operations................ 2.38 0.14
----------- --------
Net asset value, end of period.......... $ 14.52 $ 12.14
----------- --------
----------- --------
Total investment return (c)............. 19.60% 1.17%(b)
----------- --------
----------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 344 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by the Manager......... 0.31% 0.18%(a)
Without expense reductions and
reimbursement by the Manager......... 0.20% (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by the Manager......... 1.64% 1.86%(a)
Without expense reductions and
reimbursement by the Manager......... 1.75% 2.12%(a)
Portfolio Turnover Rate++............... 41% 45%
Average commission rate per share paid
on portfolio transactions++............ $0.0109 N/A
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average shares
outstanding during the period.
* Before reimbursement by the Manager, 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 year 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.
++ Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the class of shares
issued. The Fund invests only in the Infrastructure Portfolio and does not
engage in securities transactions. Accordingly, the portfolio turnover and
average commission rates presented are for the Infrastructure Portfolio.
N/A Not applicable.
Prospectus Page 14
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
----------------------------------- ----------------------------------
MAY 31, 1994 MAY 31, 1994
YEAR ENDED (COMMENCEMENT YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS) OCTOBER 31, OF OPERATIONS)
----------------- TO ---------------- TO
1996(D) 1995 OCTOBER 31, 1994 1996(D) 1995 OCTOBER 31, 1994
-------- ------- ---------------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period....................................... $ 11.44 $ 12.41 $ 11.43 $ 11.36 $ 12.38 $ 11.43
-------- ------- -------- ------- ------- --------
Income from investment operations:
Net investment income (loss)................ (0.24) 0.04* 0.06* (0.31) (0.02)* 0.03*
Net realized and unrealized gain (loss) on
investments................................ 6.28 (0.98) 0.92 6.25 (0.98) 0.92
-------- ------- -------- ------- ------- --------
Net increase (decrease) from investment
operations................................... 6.04 (0.94) 0.98 5.94 (1.00) 0.95
-------- ------- -------- ------- ------- --------
Distributions:
From net investment income.................. (0.04) (0.03) (0.00) (0.00) (0.02) (0.00)
From net realized gain on investments....... (0.01) (0.00) (0.00) (0.01) (0.00) (0.00)
-------- ------- -------- ------- ------- --------
Total distributions....................... (0.05) (0.03) (0.00) (0.01) (0.02) (0.00)
-------- ------- -------- ------- ------- --------
-------- ------- -------- ------- ------- --------
Net asset value, end of period................ $ 17.43 $ 11.44 $ 12.41 $ 17.29 $ 11.36 $ 12.38
-------- ------- -------- ------- ------- --------
-------- ------- -------- ------- ------- --------
Total investment return (c)................... 53.04% (7.58)% 8.57%(b) 52.39% (8.05)% 8.31%(b)
-------- ------- -------- ------- ------- --------
-------- ------- -------- ------- ------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).......... $ 48,729 $12,598 $14,797 $57,749 $13,978 $13,404
Ratio of net investment income (loss) to
average net assets:
With expense reductions and reimbursement
from the
Manager.................................... (1.55)% 0.41% 2.63%(a) (2.05)% (0.09)% 2.13%(a)
Without expense reductions and reimbursement
from the
Manager.................................... (1.65)% (0.69)% 0.65%(a) (2.15)% (1.19)% 0.15%(a)
Ratio of expenses to average net assets:
With expense reductions and reimbursement
from the
Manager.................................... 2.20% 2.37% 2.40%(a) 2.70% 2.87% 2.90%(a)
Without expense reductions and reimbursement
from the
Manager.................................... 2.30% 3.47% 4.38%(a) 2.80% 3.97% 4.88%(a)
Portfolio Turnover Rate++..................... 94% 87% 137% 94% 87% 137%
Average commission rate per share paid on
portfolio transactions++..................... $ 0.0243 N/A N/A $0.0243 N/A N/A
<CAPTION>
ADVISOR CLASS+
--------------------------
JUNE 1, 1995
YEAR ENDED TO
OCTOBER 31, OCTOBER 31,
1996(D) 1995
----------- ------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period....................................... $ 11.47 $ 11.45
----------- ------------
Income from investment operations:
Net investment income (loss)................ (0.17) 0.11*
Net realized and unrealized gain (loss) on
investments................................ 6.28 (0.09)
----------- ------------
Net increase (decrease) from investment
operations................................... 6.11 0.02
----------- ------------
Distributions:
From net investment income.................. (0.10) (0.00)
From net realized gain on investments....... (0.01) (0.00)
----------- ------------
Total distributions....................... (0.11) (0.00)
----------- ------------
----------- ------------
Net asset value, end of period................ $ 17.47 $ 11.47
----------- ------------
----------- ------------
Total investment return (c)................... 53.76% 0.17%(b)
----------- ------------
----------- ------------
Ratios and supplemental data:
Net assets, end of period (in 000's).......... $ 5,502 $95
Ratio of net investment income (loss) to
average net assets:
With expense reductions and reimbursement
from the
Manager.................................... (1.05)% 0.91%(a)
Without expense reductions and reimbursement
from the
Manager.................................... (1.15)% (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and reimbursement
from the
Manager.................................... 1.70% 1.87%(a)
Without expense reductions and reimbursement
from the
Manager.................................... 1.80% 2.97%(a)
Portfolio Turnover Rate++..................... 94% 87%
Average commission rate per share paid on
portfolio transactions++..................... $0.0243 N/A
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average shares
outstanding during the period.
* Before reimbursement by the Manager, 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.
++ Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the classes of shares
issued. The Fund invests only in the Natural Resources Portfolio and does
not engage in securities transactions. Accordingly, the portfolio turnover
and average commission rates presented are for the Natural Resources
Portfolio.
N/A Not applicable.
Prospectus Page 15
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVES
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, which, 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.
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 the Manager, stand to benefit from developments in the financial
services industries.
GLOBAL FINANCIAL SERVICES INDUSTRIES INVESTMENT. Examples of financial services
companies include 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.
The Manager believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in the Manager's view, as the industries evolve, opportunities will
emerge for those companies positioned for the future. Thus, the Manager 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, which, 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.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by infrastructure companies. An "infrastructure" company is an entity in
which (i) at least 50% of either the revenues or earnings was derived from
infrastructure activities, or (ii) at least 50% of the assets was devoted to
such activities, based on the company's most recent fiscal year. The remainder
of the Infrastructure Portfolio's assets may be invested in debt securities
issued by infrastructure companies and/or equity and debt securities of
companies outside of the infrastructure industries, which, in the opinion of the
Manager, stand to benefit from developments in the infrastructure industries.
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
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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 the Manager's judgment, constitute services significant to the
development of a country's infrastructure.
The Manager believes that a country's infrastructure is one key to the long-term
success of that country's economy. The Manager believes that adequate energy,
transportation, water, and communications systems are essential elements for
long-term economic growth. The Manager 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 Pacific Rim,
the Manager expects that the replacement and upgrade of transportation and
communications systems should stimulate growth in the infrastructure industries
of those countries. In addition, in the Manager's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
The Manager 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, which, 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.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Portfolio's assets may be invested in
debt securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries, which, in
the opinion of the Manager, stand to benefit from developments in the natural
resource industries.
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 the Manager's opinion are
significant to the ownership and development of natural resources and other
basic commodities.
The Manager 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. The Manager believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
The Manager also believes that investments in natural resource industries offer
an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. The Manager believes that rising commodity prices and
increasing worldwide industrial production may favorably affect share prices of
natural resource companies, and investments in
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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, which, 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.
At least 65% of the Consumer Products and Services Portfolio's total assets
normally will be invested in common and preferred stocks and warrants to acquire
such securities issued by consumer products and services companies. A "consumer
products or services" company is an entity in which (i) at least 50% of either
the revenues or earnings was derived from activities relating to consumer
products or services, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. The remainder of the
Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Manager, stand to benefit from
developments in such industries.
GLOBAL CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. Examples of
consumer products and services companies include those that manufacture, market,
retail, or distribute: durable goods (such as homes, household goods,
automobiles, boats, furniture and appliances, and computers); non-durable goods
(such as food and beverages and apparel); 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 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, the Manager 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.
The Manager 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, Eastern Europe and Latin America, offer opportunities for the growth and
expansion of consumer markets. These regions currently comprise a growing source
of inexpensive consumer products for export and a growing source of demand for
consumer products and services as the disposable incomes of their populations
increase. In the Manager'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.
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 the Manager, stand to benefit from
developments in the health care industries.
GLOBAL HEALTH CARE INDUSTRIES INVESTMENT. Examples of health care companies
include those that are substantially engaged in the design, manufacture
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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.
The Manager believes that the global health care industries offer attractive
long-term supply/demand dynamics. While the United States, Western Europe, and
Japan presently account for a substantial portion 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, the Manager 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 the Manager'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. The Manager 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.
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 the Manager, stand to benefit from developments in the
telecommunications industries.
GLOBAL TELECOMMUNICATIONS INDUSTRIES INVESTMENT. Telecommunications companies
cover 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. The Manager will allocate the Telecommunications Fund's
investments among these sectors depending upon its assessment of their relative
long-term growth potential.
Examples of telecommunications companies include those engaged 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.
The Manager believes that there are opportunities for continued growth in demand
for components, products, media and systems to collect, store,
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GT GLOBAL THEME FUNDS
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.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. 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, the Manager 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. The Manager 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, the Manager 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.
The Manager 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.
In analyzing specific companies for possible investment, the Manager 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.
In assessing companies for the Natural Resources Portfolio, the Manager will
also 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.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Manager 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 of U.S. or foreign issuers. In addition, for temporary
defensive purposes, 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 Fund 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.
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"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Theme
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GT GLOBAL THEME FUNDS
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.
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. 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 Theme Portfolio also may borrow up
to 5% of its total assets for temporary or emergency purposes other than to meet
redemptions. A Theme Portfolio may borrow up to 33 1/3% of its total assets.
However, no additional investments will be made if a Theme Portfolio's
borrowings exceed 5% of its total assets. 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.
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.
SECURITIES LENDING. Each Theme Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Theme Portfolios to retain ownership of the securities loaned and, at the
same time, earn additional income that may be used to offset a Theme Portfolio's
custody fees. Each Theme Portfolio limits its loans of portfolio securities to
an aggregate of 30% of the value of its total assets, measured at the time any
such loan is made. While a loan is outstanding, the borrower must maintain with
the Theme Portfolio's custodian collateral consisting of cash, U.S. government
securities or certain irrevocable letters of credit equal to at least the value
of the borrowed securities, plus any accrued interest. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Theme Portfolios may purchase
debt securities on a "when-issued" basis and may purchase or sell such
securities on a "forward commitment" basis in order to hedge against anticipated
changes in interest rates and prices. The price, which is generally expressed in
yield terms, is fixed at the time the commitment is made, but delivery and
payment for the securities take place at a later date. When-issued securities
and forward commitments may be sold prior to the settlement date, but a Theme
Portfolio will purchase or sell when-issued securities or enter into forward
commitments only with the intention of actually receiving or delivering the
securities, as the case may be. No income accrues on securities which have been
purchased pursuant to a forward commitment or on a when-issued basis prior to
delivery to the Theme Portfolio. If the Theme Portfolio disposes of the right to
acquire a when-issued security prior to its acquisition or disposes of its right
to deliver or receive against a forward commitment, it may incur a gain or loss.
At the time a Theme Portfolio enters into a transaction on a when-issued or
forward commitment basis, a segregated account consisting of cash or liquid
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.
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 attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio.
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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. See "Risk Factors -- Options, Futures and Forward
Currency Transactions" herein and "Options, Futures and Currency Strategies" 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. Each
Theme Portfolio also may purchase and sell put and call options on currencies,
futures contracts on currencies and options on such futures contracts 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 the Manager intends to
include in the Theme Portfolio's portfolio. The Theme Portfolio also may
purchase and sell put and call options on stock indexes to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
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 purchase 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.
OTHER INFORMATION. The investment objective of each Fund may not be changed
without the approval of a majority of that Fund's outstanding voting securities.
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 which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Funds' investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by vote of the
Company's Board of Directors 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.
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.
OTHER INFORMATION REGARDING THE PORTFOLIOS. As previously described, 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.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund may each redeem 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. A change in a Portfolio's investment objective, policies or limitations
which is
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GT GLOBAL THEME FUNDS
not approved by the Board or the shareholders of the corresponding Fund could
require the Fund to redeem its interest in the Portfolio. Any such redemption
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) by the Portfolio. Should such a distribution occur, the Fund
could incur brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could result in a less
diversified portfolio of investments for the Fund and could adversely affect the
liquidity of the Fund. Upon redemption, 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 advisor 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.
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.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund may each be materially affected by the
actions of large investors in its corresponding Portfolio, if any. For example,
as with all open-end investment companies, if a large investor were to redeem
its interest in a Portfolio, (1) that Portfolio's remaining investors could
experience higher pro rata operating expenses, thereby producing lower returns;
and (2) 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.
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GT GLOBAL THEME FUNDS
RISK FACTORS
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GENERAL. There is no assurance that any Fund or Portfolio will achieve its
investment objective. The Funds' net asset values will fluctuate reflecting
fluctuations in the market value of the Theme Portfolios' portfolio positions.
Equity securities, particularly common stocks, generally represent the most
junior position in an issuer's capital structure, and entitle holders to an
interest in the assets of an issuer, if any, remaining after all more senior
claims have been satisfied. In addition, the value of debt securities held by a
Theme Portfolio generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
Because each Theme Portfolio focuses its investments on particular 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. Accordingly, no Fund should be
considered a complete investment program.
FINANCIAL SERVICES FUND AND FINANCIAL SERVICES PORTFOLIO. 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 offered by companies in the
financial services industries. Governmental regulation may limit both the
financial commitments banks can make, including the amounts and types of loans,
and the interest rates and fees they can charge. In addition, governmental
regulation in certain foreign countries may impose interest rate controls,
credit controls and price controls.
Companies in the financial services sector 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.
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 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. 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.
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INFRASTRUCTURE FUND AND INFRASTRUCTURE PORTFOLIO. 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 policy
and the need for regulatory approvals may have a material effect on the products
and services offered by companies in the infrastructure industries. 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. Governmental
regulation may also hamper the development of new technologies.
In addition, many infrastructure 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. 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. 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.
NATURAL RESOURCES FUND AND NATURAL RESOURCES PORTFOLIO. 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 offered by companies in the
natural resource industries. 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. Governmental
regulation may also hamper the development of new technologies.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations. Further, competition is intense for many natural resource
companies. As a result, many of these companies may be adversely affected in the
future and the value of the securities issued by such companies may be subject
to increased share price volatility.
The value of the Natural Resources Portfolio's securities will fluctuate in
response to stock market developments, as well as market conditions for the
particular natural resources with which the issuer is involved. The price of the
commodity will fluctuate due to changes in worldwide levels of inventory, and
changes, perceived or actual, in production and consumption. The values of
natural resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics. The Natural Resources
Portfolio's investments in precious metals are subject to many risks, including
substantial price fluctuations over short periods of time. Further, the Natural
Resources Portfolio's investments in companies are expected to be subject to
irregular fluctuations in earnings, because these companies are affected by
changes in the availability of money, the level of interest rates, and other
factors.
CONSUMER PRODUCTS AND SERVICES FUND AND CONSUMER PRODUCTS AND SERVICES
PORTFOLIO. The performance of consumer products and services companies relates
closely to the actual or perceived performance of the overall economy, interest
rates and consumer confidence. In addition, changes in demographics and consumer
tastes may also affect the demand for, and success of, particular consumer
products and services. Many consumer products and services companies have
unpredictable earnings, due in part to changes in consumer tastes and intense
competition. As a result, such companies may be subject to increased share price
volatility. The consumer products and services industries may also be subject to
greater government regulation, including trade regulation, than many other
industries. Changes in governmental policy and the need for regulatory approvals
may have a material effect on the products and services offered by companies in
the consumer products and services industries. Such governmental
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GT GLOBAL THEME FUNDS
regulations may also hamper the development of new business opportunities.
HEALTH CARE FUND. Health care industries generally are subject to substantial
governmental regulation. Changes in governmental policy or regulation could have
a material effect on the demand for products and services offered by companies
in the health care industries and therefore could affect the performance of the
Health Care Fund. Regulatory approvals are generally required before new drugs
and medical devices or procedures may be introduced and before the acquisition
of additional facilities by health care providers. In addition, the products and
services offered by such companies may be subject to rapid obsolescence caused
by technological and scientific advances.
TELECOMMUNICATIONS FUND. Telecommunications industries may be subject to greater
governmental regulation than many other industries and changes in governmental
policy and the need for regulatory approvals may have a material effect on the
products and services offered by companies in the telecommunications industries.
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 in the
telecommunications industries are engaged in fierce competition for market share
that could result in increased share price volatility.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Theme Portfolios' interest and dividends from foreign issuers may
be subject to non-U.S. withholding taxes, thereby reducing the Theme Portfolios'
net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Theme Portfolios, political or social instability, or
diplomatic developments which could affect the Theme Portfolios' investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions.
Each Theme Portfolio may invest in issuers domiciled in "emerging markets."
Investing in emerging market countries involves risks in addition to those risks
involved in foreign investing. Many emerging market countries have experienced
high rates of inflation for many years. In addition, 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 market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Theme Portfolios will also be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between foreign 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.
LOWER QUALITY DEBT SECURITIES. The Financial Services Portfolio, the Health Care
Fund and the 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, that is, rated below BBB by Standard & Poor's
Ratings Group ("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's") or,
if unrated, deemed to be of equivalent quality in the judgment of the Manager.
Such investments involve a high degree of risk. However, no Theme Portfolio
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GT GLOBAL THEME FUNDS
will 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. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, 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.
ILLIQUID SECURITIES. 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
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GT GLOBAL THEME FUNDS
up to 10% of its total assets, in securities for which no readily available
market exists, so-called "illiquid securities." The Manager believes that
carefully selected investments in joint ventures, cooperatives, partnerships and
state enterprises which are illiquid (collectively, "Special Situations") could
enable the Theme Portfolios to achieve capital appreciation substantially
exceeding the appreciation the Theme Portfolios would realize if they did not
make such investments. However, in order to attempt to limit investment risk,
each Theme Portfolio will invest no more than 5% of its total assets in Special
Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid restricted securities often sell
at a price lower than similar securities that are not subject to restrictions on
resale.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although each Theme
Portfolio is authorized to enter into options, futures and forward currency
transactions, a Portfolio might not enter into any such transactions. Options,
futures and foreign currency transactions involve certain risks, which include:
(1) dependence on the Manager'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 loss of principal under certain conditions; (6) the possible inability
of a Theme Portfolio to purchase or sell a portfolio security at a time when it
would otherwise be favorable for it to do so, or the possible need for a Theme
Portfolio to sell a security at a disadvantageous time, due to the need for the
Theme Portfolio to maintain "cover" or to set aside securities in connection
with hedging transactions; and (7) the possible need to defer closing out
certain options, futures contracts, forward currency contracts and/or foreign
currency positions in order to continue to qualify for the beneficial tax
treatment afforded regulated investment companies under the Internal Revenue
Code of 1986, as amended ("Code"). See "Dividends, Other Distributions and
Federal Income Taxation" herein and "Taxes" in the Statement of Additional
Information.
INVESTING IN SMALLER COMPANIES. 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.
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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 $10,000 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 a
least $10,000 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 composing or affiliated with Liechtenstein
Global Trust; and (e) any of the companies composing 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.
All purchase orders will be executed at the public offering price next
determined after the purchase order is received. 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. 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. In particular, the Funds and GT Global may reject purchase orders or
exchanges by investors who appear to follow, in the Manager's judgment, a
market-timing strategy or otherwise engage in excessive trading. See "How to
Make Exchanges -- Limitations on Purchase Orders and Exchanges."
Fiduciaries and Financial Advisors may be required to provide information
satisfactory to GT Global concerning their eligibility to purchase Advisor Class
shares. For specific information on opening an account, please contract 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. 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.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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GT GLOBAL THEME FUNDS
allocation across a range of GT Global Mutual Funds. The Program automatically
rebalances holdings of GT Global Mutual Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, GT Global Mutual Funds ("Personal Portfolio") is to
be rebalanced on a monthly, quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholder's Personal Portfolio for
shares of the same class of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
Funds in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of Fund(s) that have
appreciated most during the period being exchanged for shares of Fund(s) that
have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES.
See "Dividends, Other Distributions and Federal Income Taxation." Participation
in the Program does not assure that a shareholder will profit from purchases
under the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
under the Program are not subject to the four free exchanges per year
limitation. The Funds and GT Global reserve the right to modify, suspend, or
terminate the Program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Certain broker/ dealers may
charge a fee for establishing accounts relating to the Program. Investors should
contact their broker/dealers or GT Global for more information.
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GT GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
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Advisor Class shares of any Fund may be exchanged for Advisor Class shares of
any of the other GT Global Mutual Funds (including the other Funds), based on
their respective net asset values, provided that the registration remains
identical. EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER REALIZING
A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." In addition to the 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 SMALL CAP
GROWTH FUND
-- GT GLOBAL AMERICA MID 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
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. The terms of the exchange offer may be modified at any time, on 60
days' prior written notice.
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 prior to acting
upon instructions received by telephone, including requiring some form of
personal identification, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the 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.
LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and GT Global reserve the right to refuse
purchase orders and exchanges by any person or group, if, in the Manager's
judgment, such person or group was following a market-timing strategy or was
otherwise engaging in excessive trading.
In addition, each GT Global Mutual Fund and GT Global reserve the right to
refuse purchase orders and exchanges by any person or group if, in the Manager's
judgment, the Fund would not be able to invest the money effectively in
accordance with that Fund's investment objective and policies or would otherwise
potentially be adversely affected. Although a GT Global Mutual Fund will attempt
to give investors prior notice whenever it is reasonably able to do so, it may
impose the above restrictions at any time.
Finally, as described above, each GT Global Mutual Fund and GT Global reserve
the right to reject any purchase order.
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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. 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 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 prior to acting
upon instructions received by telephone, including requiring some form of
personal identification, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her Financial Advisor.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after
Prospectus Page 32
<PAGE>
GT GLOBAL THEME FUNDS
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 33
<PAGE>
GT GLOBAL THEME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. It is recommended that investors in Wrap Fee Accounts and Advisory
Accounts make such orders through their Financial Advisor. PLEASE BE CAREFUL TO
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. See "How to Invest;"
"How to Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" for more information.
Each 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 34
<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 proportionate share of total assets of 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 the Manager
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 that 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 and pays 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 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
Prospectus Page 35
<PAGE>
GT GLOBAL THEME FUNDS
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 CONSEQUENCES OF DIVIDENDS AND OTHER
DISTRIBUTIONS ARE 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 the distribution 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 30 days before or after redeeming other shares of the same Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Funds and their shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 36
<PAGE>
GT GLOBAL THEME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the 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.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") 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, the Manager 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 the Manager 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 the Manager. The Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio each pays the Manager a fee, based on each such Portfolio's
average daily net assets at the annualized rate of .725% on the first $500
million, .70% on the next $500 million, .675% on the next $500 million and .65%
on all amounts thereafter. For investment management and administration services
provided to the Health Care Fund and Telecommunications Fund, each such Fund
pays the Manager 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. Each Theme Portfolio pays all expenses not assumed by the Manager, GT
Global or other agents. The Manager has undertaken to limit each Theme
Portfolio's expenses (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the annual rate of 1.90% of the average daily net
assets of each Fund's Advisor Class shares. This undertaking may be changed or
eliminated in the future.
The Manager also serves as each Theme Portfolio's pricing and accounting agent.
For these services the Manager receives a fee at an annual rate 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.
The Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager 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 the Manager are located at 50 California Street, 27th Floor, San
Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
formerly Bank in Liechtenstein, compose 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 a 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, 1996, the Manager and its worldwide asset management
affiliates manage
Prospectus Page 37
<PAGE>
GT GLOBAL THEME FUNDS
approximately $62 billion. In the United States, as of December 31, 1996, the
Manager manages or administers approximately $10 billion of GT Global Mutual
Funds. As of December 31, 1996, assets entrusted to Liechtenstein Global Trust
total approximately $84 billion.
On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor Capital")
merged with LGT Asset Management, Inc. and the resulting entity was named
Chancellor LGT Asset Management, Inc. As of September 30, 1996, Chancellor
Capital and its affiliates, based in New York, were the 15th largest independent
investment manager in the United States with approximately $33 billion in assets
under management. Chancellor Capital specialized in public and private U.S.
equity and bond portfolio management for over 300 U.S. institutional clients.
In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo, and Toronto. In managing
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve
each Fund's investment objective. Many of the GT Global Mutual Funds' portfolio
managers 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 the Manager
San Francisco since 1995. Analyst for the Manager
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).
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 the Manager
San Francisco inception in 1994 since 1993. From 1992 to 1993, Mr.
Sherry was Senior Securities Analyst
for Franklin Resources, Inc. (San
Mateo, CA).
Michael Mahoney Portfolio Manager since Portfolio Portfolio Manager for the Manager
San Francisco inception in 1994 since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
the Manager.
</TABLE>
Prospectus Page 38
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
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 the Manager
San Francisco inception in 1994 since 1994. Analyst for the Manager
from 1992 to 1994.
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 the Manager
San Francisco inception in 1994 since 1994. Analyst for the Manager
from 1992 to 1994.
GLOBAL HEALTH CARE FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Michael Yellen Portfolio Manager since 1996 Portfolio Manager for the Manager
San Francisco since 1996. Research analyst for the
Manager from 1994 to 1996. From 1991
to 1994, Mr. Yellen was a securities
analyst and co-portfolio manager for
Franklin Resources, Inc. (San Mateo,
CA).
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 the Manager
San Francisco since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
the Manager.
David L. Sherry Portfolio Manager since 1993 Portfolio Manager for the Manager
San Francisco since 1993. From 1992 to 1993, Mr.
Sherry was Senior Securities Analyst
for Franklin Resources, Inc. (San
Mateo, CA).
A. James Ellman Portfolio Manager since 1995 Portfolio Manager for the Manager
San Francisco since 1995. Analyst for the Manager
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).
</TABLE>
Prospectus Page 39
<PAGE>
GT GLOBAL THEME FUNDS
In placing orders for the Theme Portfolios' securities transactions, the Manager
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Manager may consider a broker/dealer's sale of shares
of the GT Global Mutual Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of Liechtenstein Global Trust. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Funds will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Funds' Advisor
Class shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco, CA
94111.
The Manager 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 provide promotional incentives to
broker/dealers that sell shares of a Fund 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 40
<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, 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. 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 the foregoing 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 established 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.
Each Fund offers Advisor Class shares through this Prospectus to certain
investors. Each Fund also offers Class A shares and Class B shares to investors
through a separate prospectus. Each class of shares will experience different
net asset values and dividends as a result of different expenses borne by each
class of shares. The per share net asset value and dividends of the Advisor
Class shares of a Fund generally will be higher than that of the Class A and B
shares of that Fund because of the higher expenses borne by the 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 (500 million shares in the case of Telecommunications Fund), 100
million shares as Class A shares and 100 million shares as Class B shares,
except for the Telecommunications Fund, of which 200 million shares have each
been classified as Class A shares and Class B shares, respectively. One hundred
million shares have been classified as Advisor Class shares for each Fund. These
amounts may be increased from time to time in the discretion of the Board of
Directors. Each share of each Fund represents an interest in that Fund only, has
a par value of $0.0001 per share, represents an equal proportionate interest in
that Fund with other shares of that Fund and is entitled to such dividends and
other distributions out of the
Prospectus Page 41
<PAGE>
GT GLOBAL THEME FUNDS
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, will each 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.
Shares for which no voting instructions are received will be voted in the same
proportion as the shares for which voting instructions are received.
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 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 one-, 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
reinvestment of all dividends and other distributions.
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.
Prospectus Page 42
<PAGE>
GT GLOBAL THEME FUNDS
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 the Manager 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 Theme Portfolios.
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 the
Manager, 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 43
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 44
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 45
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 46
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 47
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345
SAN FRANCISCO, CA 94120-7345 ADVISOR CLASS
800/223-2138 ACCOUNT APPLICATION
</TABLE>
<TABLE>
<S> <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 MID CAP 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.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING.
<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, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE
CONTACT YOUR FINANCIAL ADVISER 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 MID CAP GROWTH FUND
Concentrates on 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, SALES REPRESENTATIVE 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,
CHANCELLOR 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.
THEPV703 MC
<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
March 1, 1997
- --------------------------------------------------------------------------------
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")
(each , a "Fund" or "Theme Fund," and collectively, the "Funds," "Theme Funds").
Each Fund is a diversified series of G.T. Investment Funds, Inc. (the
"Company"), a registered open-end management investment company. The Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund (each a "Feeder Fund," and, collectively the "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 (each, a "Portfolio," and,
collectively, the "Portfolios"), respectively. This Statement of Additional
Information, which is not a prospectus, supplements and should be read in
conjunction with the Theme Funds' current Advisor Class Prospectus dated March
1, 1997, 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.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the investment
manager of and administrator for the Health Care Fund, Telecommunications Fund
and the Portfolios (each a "Theme Portfolio," and collectively the "Theme
Portfolios"), and also serves as the administrator for each Feeder Fund. The
distributor of the Funds' shares is GT Global, Inc. ("GT Global"). The Funds'
transfer agent is GT Global Investor Services, Inc. ("GT Services" or the
"Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 19
Execution of Portfolio Transactions...................................................................................... 23
Directors and Executive Officers......................................................................................... 25
Management............................................................................................................... 27
Valuation of Fund Shares................................................................................................. 29
Information Relating to Sales and Redemptions............................................................................ 31
Taxes.................................................................................................................... 32
Additional Information................................................................................................... 35
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 45
Financial Statements..................................................................................................... 48
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
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 a Fund's investable assets" is
used herein and in the Prospectus, it means that the only investment securities
held by a Feeder Fund will be its 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 the 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 of its corresponding Portfolio described below and in the Prospectus.
SELECTION OF EQUITY INVESTMENTS
With respect to the Natural Resource Portfolio, the Manager 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.
With respect to the Telecommunications Fund, the Manager 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 the Manager, 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 the Manager'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 the Manager 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. The Manager is not
aware at this time of the existence of any investment or exchange control
regulations which might
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL THEME FUNDS
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 the Manager 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 the Manager, the potential benefits of such
investments justify the payment of any applicable premiums. The return on 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.
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
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL THEME FUNDS
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 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.
Loans will only be made to firms deemed by the Manager to be of good standing
and will not be made unless, in the judgment of the Manager, 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
A repurchase agreement is a transaction 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 the Manager to present minimal credit risks in accordance
with guidelines established by the Company's Board of Directors, or the
Portfolios' Board of Trustees, as applicable. The Manager will review and
monitor the creditworthiness of such institutions under the applicable Board's
general supervision.
Each Theme Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price, a
Theme Portfolio would suffer a loss. If the financial institution which is party
to the repurchase agreement petitions for bankruptcy or otherwise becomes
subject to bankruptcy or other liquidation proceedings, there may be
restrictions on a Theme Portfolio's ability to sell the collateral and a Theme
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, each Theme Portfolio intends to comply with provisions under such Code
that would allow the immediate resale of such collateral. Each Theme Portfolio
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of the value of its net assets (except for
Health Care Fund, more than 10% of the value of its total assets) would be
invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets,
i.e., the Theme Portfolio's total assets at all times will equal at least 300%
of the amount of outstanding borrowings. If market fluctuations in the value of
a Theme Portfolio's securities holdings or other factors cause the ratio of a
Theme Portfolio's total assets to outstanding borrowings to fall below 300%,
within three days (excluding Sundays and holidays) of such event that Theme
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might 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
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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. A reverse
repurchase agreement is a borrowing transaction in which the 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. Each Theme Portfolio
may also engage in "roll" borrowing 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 or
liquid 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 deposited with the
intermediary. The Theme Portfolio will also be required to deposit 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 the
Manager'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 the Manager is experienced in the
use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Theme Portfolio
entered into a short hedge because the Manager 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 the Manager are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for the Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or an (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
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GT GLOBAL THEME FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise price,
and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio will realize a gain or loss from the
sale of the underlying security or currency, which will be increased or offset
by the premium received. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, the Manager 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 the
Manager 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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GT GLOBAL THEME FUNDS
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Theme Portfolio will be
obligated to purchase the security or currency at 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 the Manager deems it desirable to continue to hold the
security or currency because of tax considerations. The premium paid for the put
option and any transaction costs would reduce any profit otherwise available for
distribution when the security or currency is eventually sold.
A Theme Portfolio may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that Theme Portfolio seeks to benefit from a decline
in the market price of the underlying security or currency. If the put option is
not sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Theme Portfolio will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, the Theme Portfolio would have the
right to purchase the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. A
Theme Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Theme Portfolio for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable a Theme Portfolio to acquire the
security or currency at the exercise price of the call option plus the premium
paid. At times, the net cost of acquiring the security or currency in this
manner may be less than the cost of acquiring the security or currency directly.
This technique may also be useful to a Theme Portfolio in purchasing a large
block of securities that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option, rather than the underlying
security or currency itself, the Theme Portfolio is partially protected from any
unexpected decline in the market price of the underlying security or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
A Theme Portfolio may also purchase call options on underlying securities or
currencies it owns in order to protect unrealized gains on call options
previously written by it. A call option could be purchased for this purpose
where tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at times to
avoid realizing losses that would result in a reduction of the Theme Portfolio's
current return. For example, where a Theme Portfolio has written a call option
on an underlying security or currency having a current market value below the
price at which such security or currency was purchased by that Theme Portfolio,
an increase in the market price could result in the exercise of the call option
written by the Theme Portfolio and the realization of a loss on the underlying
security or currency. Accordingly, the Theme Portfolio could purchase a call
option on the same underlying security or currency, which could be exercised to
fulfill the Theme Portfolio's delivery obligations under its written call (if it
is exercised). This strategy could allow the Theme Portfolio to avoid selling
the portfolio security or currency at a time when it has an unrealized loss;
however, the Theme Portfolio would have to pay a premium to purchase the call
option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Theme Portfolio's total assets at the time of each purchase.
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GT GLOBAL THEME FUNDS
A Theme Portfolio may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives the Theme Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or on (European style) the expiration date of the
option. A call option gives the Theme Portfolio as purchaser the right (but not
the obligation) to purchase a specified amount of currency at the exercise price
at any time until (American style) or on (European style) the expiration date of
the option. A Theme Portfolio might purchase a currency put option, for example,
to protect itself against a decline in the dollar value of a currency in which
it holds or anticipates holding securities. If the currency's value should
decline against the dollar, the loss in currency value should be offset, in
whole or in part, by an increase in the value of the put. If the value of the
currency instead should rise against the dollar, any gain to a Theme Portfolio
would be reduced by the premium it had paid for the put option. A currency call
option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which a Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. 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 Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing 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 the Manager believes will
have a positive
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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 or liquid
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 the Manager, in accordance with procedures approved by that Board.
The Manager 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). The Manager
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.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Theme Portfolio could lose its entire investment
in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Theme Portfolio may invest may have groups that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Theme Portfolio's
investment in those countries. Instability may also result from, among other
things; (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Theme
Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Theme Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expenses of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by
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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, the Manager will take appropriate steps
to evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Theme Portfolio, under normal
circumstances, will invest a substantial portion of its total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of a Theme Portfolio's investment performance. A decline in the
value of any particular currency against the U.S. dollar will cause a decline in
the U.S. dollar value of that Theme Portfolio's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the appropriate Fund's net asset value and any net investment income and capital
gains derived from such securities to be distributed in U.S. dollars to
shareholders of that Fund. Moreover, if the value of the foreign currencies in
which a Theme Portfolio receives its income falls relative to the U.S. dollar
between receipt of the income and the making of Theme Portfolio distributions,
the Theme Portfolio may be required to liquidate securities in order to make
distributions if the Theme Portfolio has insufficient cash in U.S. dollars to
meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and 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. The Manager will consider such difficulties when determining the
allocation of a Theme Portfolio's assets, although the Manager does not believe
that such difficulties will have a material adverse effect on a Theme
Portfolio's portfolio trading activities.
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Each Theme Portfolio may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards
concerning that Theme Portfolio's investments; and possible difficulties in
obtaining and enforcing judgments against such custodians.
WITHHOLDING TAXES. Each Theme Portfolio's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that Theme Portfolio's net investment income or delaying the
receipt of income when those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Theme Portfolio invests a significant portion
of its assets in securities of issuers located in a particular country or region
of the world, such Portfolio may be subject to greater risks and may experience
greater volatility than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. 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. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western 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, 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 RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. 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 and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.
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
Statement of Additional Information Page 17
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GT GLOBAL THEME FUNDS
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea. In
addition, the Theme Portfolios intend to invest in Hong Kong, which will revert
to Chinese Administration on July 1, 1997. Investments in Hong Kong may be
subject to expropriation, national, nationalization or confiscation, in which
case a Theme Portfolio could lose its entire investment in Hong Kong. In
addition, the reversion of Hong Kong also presents a risk that the Hong Kong
dollar will be devalued and a risk of possible loss of investor confidence in
Hong Kong's currency, stock market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets 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.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economics and securities
markets of certain emerging market countries.
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GT GLOBAL THEME FUNDS
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
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 1933 Act;
(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 this Statement of Additional Information,
and collateral arrangements relating thereto will not be deemed to be
borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Portfolio may invest in
the securities of companies that engage in these activities.
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GT GLOBAL THEME FUNDS
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolios' outstanding voting securities as defined above and in the
Prospectus.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Portfolio, the Portfolio's investment adviser,
or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer;
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contract the
Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make any
additional investments); and
(8) Invest more than 10% of its total assets in shares of other
investment companies and may not invest more than 5% of its total assets in
any one investment company or acquire more than 3% of the outstanding voting
securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
approval by the affirmative vote of the lesser of (i) 67% of its shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares.
The Health Care Fund may not:
(1) Invest more than 10% of its total assets in securities which cannot
be readily resold to the public because of legal or contractual restrictions
or for which no readily available market exists, which for this purpose
includes repurchase agreements maturing in more than seven days;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or sell real estate; provided that the Health Care Fund may
invest in securities secured by real estate or interests therein or issued
by companies that invest in real estate or interests therein;
(4) Purchase securities on margin or make short sales, except for
short-term credits necessary for clearance of portfolio transactions, and
except that the Health Care Fund may make short sales and maintain short
positions and may make margin deposits in connection with its use of
options, futures contracts and options on futures contracts;
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GT GLOBAL THEME FUNDS
(5) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Health Care
Fund may be deemed to be an underwriter under federal securities laws;
(6) Make loans, except through loans of portfolio securities as
authorized by the 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 it
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 its 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.
In addition, the Health Care 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 its total assets, no more than 5% will be invested in the
securities of any one issuer, and the it 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 Health Care Fund's
outstanding voting securities as defined above and in the Prospectus.
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 its 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 1933 Act;
(4) Make loans, except that the Telecommunications Fund may purchase
debt securities and enter into repurchase agreements and may make loans of
portfolio securities;
(5) Purchase securities on margin, provided that the Telecommunications
Fund may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities; except that it may make
margin deposits in connection with futures contracts;
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GT GLOBAL THEME FUNDS
(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 it may not
exceed one-third of its total assets. Transactions involving options,
futures contracts, options on futures contracts and forward currency
contracts, as described in the Prospectus and this 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 its total assets, no more than 5% will be
invested in the securities of any one issuer, and it will purchase no more than
10% of the outstanding voting securities of any one issuer. This policy cannot
be changed without approval by the holders of a majority of the
Telecommunications Fund's outstanding voting securities as defined above and in
the Prospectus.
The following operating policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Directors without shareholder approval. The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications Fund to own more than 10% of any class of securities of
any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Telecommunications Fund's
investment adviser, or distributor, each owning beneficially more than 1/2
of 1% of the securities of such issuer, together own more than 5% of the
securities of such issuer;
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Telecommunications
Fund's total assets. While borrowings exceed 5% of the Telecommunications
Fund's total assets, the Telecommunications Fund will not make any
additional investments.
The Telecommunications Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies, and in real estate investment
trusts. The Telecommunications Fund may not invest more than 5% of its total
assets in any one investment company or acquire more than 3% of the outstanding
voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Telecommunications Fund's investment objective, which may not be changed
without the approval of shareholders, and other investment policies, techniques
and limitations, which may be changed without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Statement of Additional Information Page 22
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GT GLOBAL THEME FUNDS
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
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, the Manager 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, the Manager 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 the Manager 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, the Manager may select
broker/dealers to execute that Theme Portfolio's portfolio transaction on the
basis of the research and brokerage services they provide to the Manager 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 the Manager 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 the Manager determines in good faith that
such commission is reasonable in terms either of that particular transaction or
the overall responsibility of the Manager 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 OTC markets.
The Manager 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 the Manager 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 the Manager 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,
the Manager may consider a broker/dealer's sale of the shares of the Funds and
the other portfolios for which the Manager 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
Statement of Additional Information Page 23
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GT GLOBAL THEME FUNDS
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 OTC
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 OTC 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, 1996, 1995 and 1994, the Health Care Fund
paid aggregate brokerage commissions of $1,619,500, $545,743 and $480,241,
respectively. For the fiscal years ended October 31, 1996, 1995 and 1994, the
Telecommunications Fund paid aggregate brokerage commissions of $2,848,733,
$2,253,982 and $5,674,965, respectively. For the fiscal years ended October 31,
1996 and 1995, the Financial Services Portfolio, Infrastructure Portfolio and
Natural Resources Portfolio paid aggregate brokerage commissions of $77,822 and
$38,814, $124,164 and $122,399, and $496,370 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 year ended October 31, 1996 and 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 $356,459 and $17,605, respectively. For the fiscal year ended
October 31, 1996, the Health Care Fund paid to LGT Bank in Liechtenstein AG, an
"affiliated" broker, aggregate brokerage commissions of $32,898 for transactions
involving purchases and sales of portfolio securities which represented 2.03% of
the total brokerage commissions paid by the Health Care Fund and 0% of the
aggregate dollar amount of transactions involving payment of commissions by the
Health Care Fund.
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. 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, 1996 and 1995, the
Telecommunications Fund's portfolio turnover rates were 37% and 62%,
respectively. For the fiscal years ended October 31, 1996 and 1995, the Health
Care Fund's portfolio turnover rates were 157% and 99%, respectively. For the
fiscal years ended October 31, 1996 and 1995, the portfolio turnover rates for
the Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio were 103% and 170%, 41% and 45%, and 94% and 87%, respectively. For
the fiscal year ended October 31, 1996 and for the fiscal period December 30,
1994 (commencement of operations) to October 31, 1995, the portfolio turnover
rates for the Consumer Products and Services Portfolio were 169% and 240%,
respectively.
Statement of Additional Information Page 24
<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>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance Agency ("G.T.
Director, Chairman of the Board and Insurance") since 1996; Director, Liechtenstein Global Trust AG (holding company of the
President various international LGT companies) Advisory Board since January 1996; President, GT
50 California Street Global since 1995; President and Chief Executive Officer, G.T. Insurance since 1995;
San Francisco, CA 94111 Director, Liechtenstein Global Trust AG from 1995 to January 1996; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Vice
President and Director of Marketing, GT Global from 1987 to 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1993 to 1995; Vice President, G.T. Insurance from
1992 to 1993; and Director, Mutual Fund Forum (an industry group of mutual fund and
broker/dealer firms). Mr. Guilfoyle also is a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
C. Derek Anderson, 55 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief Executive
Director Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; and
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 the Manager.
Frank S. Bayley, 57 Partner with Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Director private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111
Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Director various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111
Ruth H. Quigley, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Director services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee of each of the
1055 California Street other investment companies registered under the 1940 Act that is managed or administered
San Francisco, CA 94108 by the Manager.
Robert G. Wade, Jr.*, 69 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Director from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036
</TABLE>
- --------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Company as
defined by the 1940 Act due to their affiliation with the LGT companies.
Statement of Additional Information Page 25
<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, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and Chief GT Services since 1995; Senior Vice President -- Finance and
Financial Officer Administration, GT Global, GT Services and G.T. Insurance, from 1994 to
50 California Street 1995; Senior Vice President -- Finance and Administration, LGT Asset
San Francisco, CA 94111 Management from 1994 to October 1996; Vice President -- Finance, LGT
Asset Management, GT Global and GT Services from 1990 to 1994; Vice
President -- Finance, G.T. Insurance from 1992 to 1994; and Director of
LGT Asset Management, GT Global and GT Services since 1991.
Kenneth W. Chancey, 51 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 50 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, LGT Asset
1166 Avenue of the Americas Management, GT Global, GT Services and G.T. Insurance from February 1996
New York, NY 10036 to October 1996; Vice President, the Manager, LGT Asset Management, GT
Global, GT Services and G.T. Insurance from May 1994 to February 1996;
General Counsel, the Manager, LGT Asset Management, GT Global, GT
Services and G.T. Insurance from May 1994 to October 1996; Secretary,
the Manager, LGT Asset Management, GT Global, GT Services and G.T.
Insurance from May 1994 to October 1996; Senior Vice President, General
Counsel and Secretary, Strong/ Corneliuson Management, Inc.; and
Secretary, each of the Strong Funds from October 1991 to May 1994.
</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. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc. and GT Global Floating Rate Fund, Inc., and a Trustee and Officer of
G.T. Global Growth Series, G.T. Global Eastern Europe Fund, G.T. Global Variable
Investment Trust, G.T. Global Variable Investment Series, Global Investment
Portfolio (of which the Portfolios are subtrusts), Growth Portfolio and Global
High Income Portfolio, which also are registered investment companies managed by
the Manager. Each Director and Officer serves in total as a Director and or
Trustee and officer, respectively of 11 registered investment companies with 41
series managed or administrated by the Manager. The Company pays each Director
who is not a director, officer or employee of the Manager 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, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley,
who are not directors, officers or employees of the Manager or any affiliated
company, received total compensation of $30,200, $30,200, $26,600 and $30,200,
respectively, from the Company for their services as Directors. For the fiscal
year ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms.
Quigley who are not directors, officers or employees of the Manager or any
affiliated company, received total compensation of $80,100, $80,100, $72,600 and
$80,100, respectively, from the investment companies managed or administered by
the Manager 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 1, 1997, 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.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL THEME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
The Manager serves as each Portfolio's investment manager and administrator
under an Investment Management and Administration Contract between each
Portfolio and the Manager ("Portfolio Management Contract") the Manager serves
as administrator to each Feeder Fund under an administration contract between
the Company and the Manager ("Administration Contract"). The Administration
Contract will not be deemed an advisory contract, as defined under the 1940 Act.
As investment manager and administrator, the Manager makes all investment
decisions for each Portfolio and, as administrator, administers each Portfolio's
and each Feeder Fund's affairs. Among other things, the Manager 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 the Manager 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 the Manager. 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 the
Manager 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).
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
The Manager 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 the
Manager. As investment manager and administrator, the Manager makes all
investment decisions for the Health Care Fund and Telecommunications Fund and
administers the Health Care Fund's and Telecommunications Fund's affairs. Among
other things, the Manager 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 the Manager 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 the Manager
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).
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 the Manager during the
periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1996...................................................................................................... $ 5,495,494
1995...................................................................................................... 4,453,857
1994...................................................................................................... 4,353,688
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1996...................................................................................................... $ 23,119,601
1995...................................................................................................... 23,861,460
1994...................................................................................................... 21,926,187
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1996...................................................................................................... $ 99,991
1995...................................................................................................... 51,353
1994 (since Fund inception on May 31, 1994)............................................................... 8,249
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1996...................................................................................................... $ 635,456
1995...................................................................................................... 601,421
1994 (since Fund inception on May 31, 1994)............................................................... 3,021
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1996...................................................................................................... $ 425,745
1995...................................................................................................... 213,856
1994 (since Fund inception on May 31, 1994)............................................................... 28,500
</TABLE>
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1996 $ 422,640
1995 (since Fund inception on December 30, 1994).......................................................... 16,284
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, and for the fiscal years ended October 31, 1995 and 1996, the Manager
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, $51,353 and $103,267; $48,901, $0
and $0; and $28,500, $0 and $0, respectively. For the same periods, the
Financial Services Fund, Infrastructure Fund and Natural Resources Fund paid
administration fees of $3,029, $18,756 and $34,865; $19,370, $208,892 and
$218,735; and $10,436, $74,485 and $147,614, respectively. However, the Manager
reimbursed those Funds for such fees in the amounts of $3,029, $18,756 and
$34,865; $19,370, $177,376 and $0; and $10,436, $74,485 and $0, respectively.
For the fiscal period December 30, 1994 (commencement of operations) to October
31, 1995, and for the fiscal year ended October 31, 1996, the Manager reimbursed
the Consumer Products and Services Portfolio for investment management and
administration fees in the amount of $16,284 and $0, respectively. For the same
periods, the Consumer Products and Services Fund paid $5,933 and $147,623,
respectively, in administration fees; however, the Manager reimbursed the Fund
in the amounts of $5,933 and $0, 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
The Transfer Agent, has been retained by the Funds to perform shareholder
servicing, reporting and general transfer agent functions for them. For these
services, the Transfer Agent receives an annual maintenance fee of $17.50 per
account,
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL THEME FUNDS
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. The
Manager also serves as each Fund's pricing and accounting agent. For the fiscal
years ended October 31, 1995 and October 31, 1996, the accounting services fees
for the Health Care Fund, Telecommunications Fund, Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund were $30,660 and $141,582; $170,297 and $621,480; $616 and $3,493; $5,836
and $21,910; $1,931 and $14,761; and $318 and $14,778, respectively.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by the Manager, 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 the Manager 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
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, adjusted for foreign exchange translation.
Options on indices, securities and currencies purchased by the Theme Portfolios
are valued at their last bid price in the case of listed options or at the
average of the last bid prices obtained from dealers, unless a quotation from
only one dealer is available, in which case only that 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
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL THEME FUNDS
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 the Manager, under the supervision of the Company's Board of Directors or
the Portfolios' Board of Trustees, as applicable, determines that the particular
event would materially affect net asset value. As a result, a Fund's net asset
value may be significantly affected by such trading on days when a shareholder
has no access to that Fund.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL THEME FUNDS
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares of a Fund purchased should accompany the
purchase order, or funds should be wired to the Transfer Agent as described in
the Prospectus. Payment, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is canceled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been canceled due to nonpayment may be prohibited
from placing future orders.
Each Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, each Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
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.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL THEME FUNDS
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
a Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the 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
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL THEME FUNDS
to whether it has received any cash distributions from the Portfolio. Each
Portfolio also is not subject to New York income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets, and to earn a proportionate share of
its corresponding Portfolio's income, for purposes of determining whether the
Fund satisfies the requirements to qualify as a RIC, each Portfolio intends to
conduct its operations so that its corresponding Fund will be able to continue
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 the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, and
(3) loss will be recognized if a liquidation distribution consists solely of
cash and/or unrealized receivables. Each Feeder Fund's basis for its interest in
its corresponding Portfolio generally will equal the amount of cash and the
basis of any property the Fund invests in the Portfolio, increased by the Fund's
share of the Portfolio's net income and gains and decreased by (1) the amount of
cash and the basis of any property the Portfolio distributes to the Fund and (2)
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 ("foreign taxes") that would reduce the yield on its
securities. Tax conventions between certain countries and the United States may
reduce or eliminate 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 taxes
paid by it (taking into account, in the case of a Feeder Fund, its proportionate
share of any foreign taxes paid by its corresponding Portfolio) (a "Fund's
foreign taxes"). Pursuant to the election, a Fund would treat those taxes as
dividends paid to its shareholders and each shareholder would be required to (1)
include in gross income, and treat as paid by him, his share of the Fund's
foreign taxes, (2) treat his share of those taxes and of any dividend paid by
the Fund that represents its income from foreign and U.S. possessions sources
(taking into account, in the case of a Feeder Fund, its proportionate share of
its corresponding Portfolio's Income from those 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 foreign taxes and income (taking into account, in the case
of a Feeder Fund, its proportionate share of its corresponding Portfolio's
income) from sources within 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) would be required to include in income each year its
pro rata share of the (taking into account, in the case of a Feeder Fund, its
proportionate share of its corresponding Portfolio's pro rata share) 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 the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax -- even if those earnings and gain were not
received thereby from the QEF. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL THEME FUNDS
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 disposition of foreign currencies (except certain gains
that may be excluded by future regulations), and gains from the options, Futures
and Forward Contracts derived by a Theme Portfolio with respect to its business
of investing in securities or foreign currencies, will qualify as permissible
income under the Income Requirement for that Theme Portfolio (or, in the case of
a Portfolio, its corresponding Feeder Fund). However, income from the
disposition by a Theme Portfolio of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that Theme
Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund) if
they are held for less than three months. Income from the disposition by a Theme
Portfolio of foreign currencies, and options, Futures and Forward Contracts on
foreign currencies, that are not directly related to its principal business of
investing in securities (or options and Futures with respect thereto) also will
be subject to the Short-Short Limitation for that Theme Portfolio (or, in the
case of a Portfolio, its corresponding Feeder Fund) if they are held for less
than three months.
If a Theme Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Theme Portfolio
(or, in the case of a Portfolio, its corresponding Feeder Fund) satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Theme Portfolio intends that, when it engages in hedging transactions, it will
qualify for this treatment, but at the present time it is not clear whether this
treatment will be available for all of those transactions. To the extent this
treatment is not available, a Theme Portfolio may be forced to defer the closing
out of certain options, Futures, Forward Contracts and/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 and 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.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL THEME FUNDS
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 tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust AG, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC, in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd., in Hong Kong; LGT Asset
Management Ltd., formerly G.T. Management (Japan) Ltd., in Tokyo; LGT Asset
Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd., in
Singapore; LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd.,
in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management GmbH, in
Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the 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 that firm as experts in accounting and
auditing.
USE OF NAME
The Manager 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
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," 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 (average annual total return ("T")) is computed by
using the ending redeeming value ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the SEC: P(1+T) to the (n)th power = ERV. 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) for Advisor Class shares, deduction of a sales charge is not
applicable; (4) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Company's Board of Directors;
and (5) a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Health Care Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
HEALTH CARE HEALTH CARE FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 17.30% 17.59% 23.82%
October 31, 1991 through October 31, 1996......... 7.61% n/a n/a
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 29.92%
April 1, 1993 (commencement of operations) through
October 31, 1996................................. n/a 17.78% n/a
August 7, 1989 (commencement of operation) through
October 31, 1996................................. 13.53% n/a n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
TELECOMMUNI- TELECOMMUNI- TELECOMMUNI-
CATIONS CATIONS CATIONS FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 1.92% 1.46% 7.49%
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 11.04%
April 1, 1993 (commencement of operations) through
October 31, 1996................................. n/a 10.44% n/a
January 27, 1992 (commencement of operations)
through October 31, 1996......................... 10.21% n/a n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Financial Services Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
FINANCIAL FINANCIAL SERVICES
SERVICES SERVICES FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 14.50% 14.81% 20.87%
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 20.46%
May 31, 1994 (commencement of operations) through
October 31, 1996................................. 7.61% 8.20% n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Infrastructure Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
INFRASTRUCTURE
INFRASTRUCTURE INFRASTRUCTURE FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 13.34% 13.37% 19.60%
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 14.38%
May 31, 1994 (commencement of operations) through
October 31, 1996................................. 7.86% 8.41% n/a
</TABLE>
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL THEME FUNDS
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Natural Resources Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
NATURAL
NATURAL NATURAL RESOURCES
RESOURCES RESOURCES FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 45.77% 47.39% 53.76%
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 35.58%
May 31, 1994 (commencement of operations) through
October 31, 1996................................. 17.02% 17.84% n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Consumer Products and Services Fund, stated as average annualized total
returns for the periods shown, were:
<TABLE>
<CAPTION>
CONSUMER
CONSUMER CONSUMER PRODUCTS
PRODUCTS PRODUCTS AND
AND AND SERVICES
SERVICES SERVICES FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................ 41.75% 43.11% 49.50%
June 1, 1995 (commencement of operations) to
October 31, 1996................................. n/a n/a 54.18%
December 30, 1994 (commencement of operations) to
October 31, 1996................................. 38.07% 39.45% n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A, Class B and Advisor Class shares of each Fund
and may be calculated according to several different formulas. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. Non-Standardized Returns for Class A and Class
B shares 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. Advisor Class shares are
not subject to sale charges.
Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T=(VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Health Care Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
HEALTH CARE HEALTH CARE FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 44.99 %
April 1, 1993 (commencement of operations) through
October 31, 1996................................. n/a 82.73% n/a
August 7, 1989 (commencement of operations)
through October 31, 1996......................... 162.82% n/a n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Telecommunications
Fund, stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
TELECOMMUNI- TELECOMMUNI- TELECOMMUNI-
CATIONS CATIONS CATIONS FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 16.03 %
April 1, 1993 (commencement of operations) through
October 31, 1996................................. n/a 45.75% n/a
January 27, 1992 (commencement of operations)
through October 31, 1996......................... 66.80% n/a n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Financial Services
Fund, stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
FINANCIAL
FINANCIAL FINANCIAL SERVICES
SERVICES SERVICES FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 30.24 %
May 31, 1994 (commencement of operations) through
October 31, 1996................................. 25.36% 24.01% n/a
</TABLE>
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL THEME FUNDS
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Infrastructure Fund,
stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
INFRASTRUCTURE
INFRASTRUCTURE INFRASTRUCTURE FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 21.00 %
May 31, 1994 (commencement of operations) through
October 31, 1996................................. 26.07% 24.58% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Natural Resources Fund,
stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
NATURAL
NATURAL NATURAL RESOURCES
RESOURCES RESOURCES FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 54.03 %
May 31, 1994 (commencement of operations) through
October 31, 1996................................. 53.57% 51.76% n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A, Class B and Advisor Class shares of the Consumer Products and
Services Fund, stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
CONSUMER
CONSUMER CONSUMER PRODUCTS
PRODUCTS PRODUCTS AND
AND AND SERVICES
SERVICES SERVICES FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- -------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through
October 31, 1996................................. n/a n/a 84.85%
December 30, 1994 (commencement of operations)
through
October 31, 1996................................. 89.97% 88.28% n/a
</TABLE>
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. ("Moody's") or BBB by Standard and Poor's Ratings Group ("S&P"), or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(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
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL THEME FUNDS
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 Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(6) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in 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, S&P and Fitch.
(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.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL THEME FUNDS
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J. P. Morgan, Morgan
Stanley, Smith Barney Shearson, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P., and
Ibbottson Associates, may be used, as well as information reported by the
Federal Reserve and the respective Central Banks of various nations. In
addition, GT Global may use performance rankings, ratings and commentary
reported periodically in national financial publications, including but not
limited to, Money Magazine, Mutual Funds 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.
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.,
the Manager, 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
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL THEME FUNDS
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
accounts and plans may produce returns superior to comparable non-retirement
investments. In sales material and advertisements, the Funds may also discuss
these accounts and plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): If you have earned income from employment
(including self-employment) you can contribute each year to an IRA up to the
lesser of (1) $2,000 for yourself or $4,000 for you and your spouse, regardless
of whether your spouse is employed, or (2) 100% of compensation. Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") 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.
CODE SECTION 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 SECTION 401(k)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A 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).
SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees who do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Code Section
401(k) plan. SIMPLEs are not subject to the complicated nondiscrimination rules
that generally apply to qualified retirement plans.
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, liquidity risk and
inflation risk. Risk represents the possibility that you may lose some or all of
your investment over a period of time. A basic tenet of investing is the greater
the potential reward, the greater the risk.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL THEME FUNDS
From time to time, the Funds and GT Global will quote data regarding industries,
companies, 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, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices and IFC.
3) The number of listed companies: IFC, 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, IFC and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
IFC.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: IFC, 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: IFC, The World Bank and Datastream.
14) Top three companies by country, industry or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
The Manager.
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 the Manager 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 Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.
GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL THEME FUNDS
time tested investment discipline. With investment professionals in nine offices
worldwide, we witness world events and economic developments firsthand.
The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.
Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.
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 Portfolio. 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 data
regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and its enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from sources including the following:
/ / 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
/ / IFC and publications such as the EMERGING STOCK MARKETS FACTBOOK
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Health Care Fund and the Manager 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. The Manager 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 the Manager, 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.
The Manager 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 the Manager, 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
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL THEME FUNDS
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 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 and/or deregulation 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 sources including the following:
/ / 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, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
/ / Telegeography and other publications
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 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.
The Manager expects this scenario to continue to benefit such companies 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 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 sources including the following:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL THEME FUNDS
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / IFC and its publications
/ / OECD and its publications
INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including:
/ / 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
/ / Infrastructure Finance magazine and other periodicals
FINANCIAL SERVICES FUND
From time to time the Fund and GT Global may quote information including:
/ / 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 FUND
From time to time the Fund and GT Global may quote information including:
/ / 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
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
(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.
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
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL THEME FUNDS
high as for issues designated "A-1." A-3 -- Issues carrying this designation
have adequate capacity for timely payment. They are, however, more vulnerable to
the adverse effects of changes in circumstances than obligations carrying the
higher designations. B -- Issues rated "B" are regarded as having only
speculative capacity for timely payment. C -- This rating is assigned to
short-term debt obligations with a doubtful capacity for payment. D -- Debt
rated "D" is in payment default. The "D" rating category is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered
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 pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL THEME FUNDS
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "B" or "B-" rating.
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 upon the filing
of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Theme Fund as of October 31, 1996, and
for the year then ended, appear on the following pages.
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL THEME FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of GT
Global Consumer Products & Services Fund - Consolidated, GT Global Financial
Services Fund - Consolidated, GT Global Health Care Fund, GT Global
Infrastructure Fund - Consolidated, GT Global Natural Resources Fund -
Consolidated, and GT Global Telecommunications Fund, six series of G.T.
Investment Funds, Inc., including the portfolios of investments, as of October
31, 1996, the related statements of operations for the year then ended, and the
statements of changes in net assets and financial highlights for each of the
periods indicated herein. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and 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, 1996, 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 the
aforementioned series of G.T. Investments Funds, Inc. as of October 31, 1996,
the results of their operations, changes in their net assets and their financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (51.0%)
Vons Cos., Inc.-/- ........................................ US 134,500 $ 7,447,937 4.5
RETAILERS-FOOD
Central Garden and Pet Co.-/- ............................. US 273,400 6,459,075 3.7
WHOLESALE & INTERNATIONAL TRADE
Footstar, Inc.-/- ......................................... US 280,000 6,160,000 3.6
RETAILERS-APPAREL
TJX Cos., Inc. ............................................ US 147,200 5,888,000 3.4
RETAILERS-APPAREL
Jones Apparel Group, Inc.-/- .............................. US 186,000 5,812,500 3.4
RETAILERS-APPAREL
Tiffany & Co. ............................................. US 155,300 5,746,100 3.3
RETAILERS-APPAREL
Ross Stores, Inc. ......................................... US 132,200 5,486,300 3.2
RETAILERS-APPAREL
Sun International Hotels Ltd.-/- .......................... US 114,100 5,391,225 3.1
LEISURE & TOURISM
The Finish Line, Inc.-/- .................................. US 124,200 5,278,500 3.1
RETAILERS-APPAREL
Seattle Filmworks, Inc.-/- ................................ US 276,500 5,253,500 3.0
CONSUMER SERVICES
Vans, Inc.-/- ............................................. US 311,100 5,172,038 3.0
RETAILERS-APPAREL
Safeway, Inc.-/- .......................................... US 109,500 4,694,813 2.7
RETAILERS-FOOD
Universal Outdoor Holdings, Inc.-/- ....................... US 127,400 3,742,375 2.2
BUSINESS & PUBLIC SERVICES
Imax Corp.-/- {\/} ........................................ CAN 96,100 3,459,600 2.0
CONSUMER SERVICES
Tuesday Morning Corp.-/- .................................. US 173,600 3,363,500 1.9
RETAILERS-OTHER
Borders Group, Inc.-/- .................................... US 84,600 2,664,900 1.5
RETAILERS-OTHER
United Auto Group, Inc.-/- ................................ US 60,000 2,062,500 1.2
CONSUMER SERVICES
Dominick's Supermarkets, Inc.-/- .......................... US 80,000 1,590,000 0.9
RETAILERS-FOOD
Abercrombie & Fitch Co.-/- ................................ US 68,800 1,513,600 0.9
RETAILERS-APPAREL
Lamar Advertising Co.-/- .................................. US 22,700 624,250 0.4
BUSINESS & PUBLIC SERVICES
------------
87,810,713
------------
Consumer Non-Durables (35.9%)
Philip Morris Cos., Inc. .................................. US 66,500 6,159,563 3.5
FOOD
Coachmen Industries, Inc. ................................. US 212,300 5,944,400 3.3
RECREATION
Eagle Hardware & Garden, Inc.-/- .......................... US 198,400 5,679,200 3.3
HOUSEHOLD PRODUCTS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Wet Seal, Inc. "A"-/- ..................................... US 183,400 $ 5,777,100 3.3
TEXTILES & APPAREL
Nike, Inc. "B" ............................................ US 93,600 5,510,700 3.2
TEXTILES & APPAREL
Gucci Group - NY Registered Shares{\/} .................... ITLY 77,000 5,313,000 3.1
TEXTILES & APPAREL
Adidas AG - 144A ADR{.} -/- {\/} .......................... GER 121,100 5,177,025 3.0
TEXTILES & APPAREL
Cannondale Corp.-/- ....................................... US 266,500 5,130,125 3.0
RECREATION
Fila Holding S.p.A. - ADR{\/} ............................. ITLY 66,200 4,766,400 2.8
TEXTILES & APPAREL
Harley-Davidson, Inc. ..................................... US 72,400 3,267,050 1.9
OTHER CONSUMER GOODS
Barco N.V. (Barco Industries) ............................. BEL 17,320 2,850,549 1.7
OTHER CONSUMER GOODS
K2, Inc. .................................................. US 109,000 2,507,000 1.5
RECREATION
Consolidated Cigar Holdings, Inc.-/- ...................... US 75,000 2,043,750 1.2
TOBACCO
Noble China-/- {/\} ....................................... CHNA 341,200 954,352 0.6
BEVERAGES - ALCOHOLIC
Rally's Hamburgers, Inc.-/- ............................... US 190,400 833,000 0.5
FOOD
------------
61,913,214
------------
Multi-Industry/Miscellaneous (3.2%)
Bulgari S.p.A. ............................................ ITLY 314,000 5,474,098 3.2
------------
MULTI-INDUSTRY
Finance (3.1%)
Amer Group Ltd. ........................................... FIN 231,600 5,239,010 3.0
INVESTMENT MANAGEMENT
Metris Cos., Inc.-/- ...................................... US 1,000 23,750 0.1
OTHER FINANCIAL
------------
5,262,760
------------
Consumer Durables (1.2%)
Boyds Wheels, Inc. ........................................ US 151,200 2,097,900 1.2
------------
AUTO PARTS
Technology (1.1%)
Ingram Micro, Inc. "A"-/- ................................. US 95,000 1,710,000 1.0
COMPUTERS & PERIPHERALS
CyberMedia, Inc.-/- ....................................... US 5,800 129,050 0.1
SOFTWARE
------------
1,839,050
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (0.8%)
Kevco, Inc.-/- ............................................ US 115,000 $ 1,380,000 0.8
MISC. MATERIALS & COMMODITIES
------------ -----
TOTAL EQUITY INVESTMENTS (cost $156,514,774) ................ 165,777,735 96.3
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1996, with State Street Bank & Trust Co.,
due November 1, 1996, for an effective yield of 5.55%,
collateralized by $9,665,000 U.S. Treasury Bond, 7.875%
due 11/15/07 (market value of collateral is $10,791,312,
including accrued interest). (cost $10,575,630) .......... 10,575,630 6.1
------------ -----
TOTAL INVESTMENTS (cost $167,090,404) * ..................... 176,353,365 102.4
Other Assets and Liabilities ................................ (4,102,558) (2.4)
------------ -----
NET ASSETS .................................................. $172,250,807 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{/\} Security is denominated in Canadian Dollars.
-/- 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 $167,206,893 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 13,635,691
Unrealized depreciation: (4,489,219)
-------------
Net unrealized appreciation: $ 9,146,472
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, 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>
Belgium (BEL/BEF) .................... 1.7 1.7
Canada (CAN/CAD) ..................... 2.0 2.0
China (CHNA/RMB) ..................... 0.6 0.6
Finland (FIN/FIM) .................... 3.0 3.0
Germany (GER/DEM) .................... 3.0 3.0
Italy (ITLY/ITL) ..................... 9.1 9.1
United States (US/USD) ............... 76.9 3.7 80.6
------ ----- -----
Total ............................... 96.3 3.7 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $172,250,807.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Banks-Regional (37.7%)
BankAmerica Corp. ......................................... US 6,200 $ 567,300 3.0
Zagrebacka Banka - 144A GDR{.} -/- {\/} ................... CRT 20,000 387,500 2.3
Sovereign Bancorp, Inc. ................................... US 31,000 364,250 2.1
First Tennessee National Corp. ............................ US 10,000 363,750 2.1
Anglo-Irish Bank Corp., PLC: .............................. IRE -- -- 2.1
Common{/\} .............................................. -- 259,000 299,203 --
Common .................................................. -- 50,000 58,168 --
Sparbanken Sverige AB "A" ................................. SWDN 21,000 332,648 1.9
NationsBank Corp. ......................................... US 3,300 311,025 1.8
Banco Commercial S.A. - 144A ADR{.} {\/} .................. URGY 18,400 303,600 1.8
Commerce Bancorp, Inc. .................................... US 9,150 253,913 1.5
Bank of Nova Scotia ....................................... CAN 7,700 242,653 1.4
Bank of Montreal .......................................... CAN 8,000 241,963 1.4
Banco BHIF - ADR-/- {\/} .................................. CHLE 13,300 239,400 1.4
Canadian Imperial Bank of Commerce ........................ CAN 5,700 236,809 1.4
Bank of Boston Corp. ...................................... US 3,300 211,200 1.2
Norbanken AB-/- ........................................... SWDN 7,700 202,894 1.2
LLoyds TSB Group PLC ...................................... UK 31,400 199,252 1.2
Christiania Bank Og Kreditkasse-/- ........................ NOR 66,600 182,749 1.1
Sydbank A/S ............................................... DEN 4,500 164,920 1.0
Mellon Bank Corp. ......................................... US 2,500 162,813 0.9
Mark Twain Bancshares, Inc. ............................... US 3,500 160,563 0.9
Zions Bancorp. ............................................ US 1,700 153,850 0.9
Cullen/Frost Bankers, Inc. ................................ US 5,000 150,313 0.9
PT Bank Internasional Indonesia - Foreign ................. INDO 180,658 145,485 0.8
Jyske Bank ................................................ DEN 2,000 144,197 0.8
Grupo Financiero Banorte "B"-/- ........................... MEX 120,000 119,701 0.7
Westpac Banking Corp., Ltd. ............................... AUSL 20,000 114,077 0.7
Allied Irish Bank PLC{/\} ................................. IRE 17,794 112,769 0.7
Amalgamated Banks of South Africa-/- ...................... SAFR 18,000 91,747 0.5
------------
6,518,712
------------
Banks-Money Center (17.2%)
Citicorp .................................................. US 4,500 445,500 2.5
Unidanmark AS "A" ......................................... DEN 9,000 415,039 2.4
Den Danske Bank ........................................... DEN 5,280 378,863 2.2
HSBC Holdings PLC ......................................... HK 13,000 264,819 1.5
Chase Manhattan Corp. ..................................... US 3,000 257,250 1.5
Bank Hapoalim Ltd.-/- ..................................... ISRL 158,000 214,480 1.2
Bank of New York Co., Inc. ................................ US 6,000 198,750 1.2
Bank of Tokyo - Mitsubishi ................................ JPN 8,750 178,493 1.0
Bangkok Bank Co., Ltd. - Foreign .......................... THAI 14,300 152,593 0.9
Bank of Ireland ........................................... IRE 18,000 147,901 0.9
Security Bank Corp.-/- .................................... PHIL 70,000 130,716 0.8
Thai Farmers Bank Ltd. - Foreign .......................... THAI 14,100 107,866 0.6
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Banks-Money Center (Continued)
Commercial Bank of Korea .................................. KOR 9,900 $ 85,303 0.5
------------
2,977,573
------------
Consumer Finance (9.6%)
First Chicago NBD Corp. ................................... US 9,000 459,000 2.5
Green Tree Financial Corp. ................................ US 6,600 261,525 1.5
Promise Co., Ltd. ......................................... JPN 5,000 233,448 1.4
Dean Witter, Discover & Co. ............................... US 3,600 211,950 1.2
Nichiei Co., Ltd. ......................................... JPN 3,000 199,947 1.2
Acom Co., Ltd. ............................................ JPN 4,000 153,697 0.9
First Financial Caribbean Corp. ........................... US 5,100 131,325 0.8
Metris Cos., Inc.-/- ...................................... US 500 11,875 0.1
------------
1,662,767
------------
Securities Broker (7.0%)
Peregrine Investment Holdings Ltd. ........................ HK 245,000 394,512 2.3
Hambrecht & Quist Group-/- ................................ US 8,500 168,938 1.0
Nomura Securities Co., Ltd. ............................... JPN 10,000 165,304 1.0
Daiwa Securities Co., Ltd. ................................ JPN 14,000 151,411 0.9
Nikko Securities Co., Ltd. ................................ JPN 15,000 143,762 0.8
Yamaichi Securities Co., Ltd. ............................. JPN 22,000 122,641 0.7
Dongwon Securities Co. .................................... KOR 3,500 54,794 0.3
------------
1,201,362
------------
Other Financial (6.3%)
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 7,200 376,200 2.1
Shohkoh Fund .............................................. JPN 1,200 252,176 1.5
Investors Financial Services Corp. ........................ US 7,000 181,125 1.1
Transaction Network Service-/- ............................ US 11,050 150,556 0.9
JACCS Co., Ltd. ........................................... JPN 16,000 127,178 0.7
------------
1,087,235
------------
Investment Management (5.8%)
Invesco PLC: .............................................. UK -- -- 2.5
ADR{\/} ................................................. -- 9,000 336,375 --
Common .................................................. -- 23,300 88,143 --
Alliance Capital Management L.P. .......................... US 14,200 395,825 2.3
Franklin Resources, Inc. .................................. US 2,500 176,250 1.0
------------
996,593
------------
Real Estate (2.4%)
Alexander Haagen Properties, Inc. ......................... US 15,400 227,150 1.4
Beacon Properties Corp. ................................... US 5,500 161,563 0.9
Tornet Fastighets AB-/- ................................... SWDN 1,700 21,621 0.1
------------
410,334
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Insurance - Multi-Line (2.2%)
Corporacion Mapfre ........................................ SPN 4,000 $ 197,601 1.1
Axa Group ................................................. FR 2,940 183,689 1.1
------------
381,290
------------
Telecom - Other (1.5%)
Gilat Satellite Networks Ltd.-/- {\/} ..................... ISRL 9,000 175,500 1.0
Olivetti Group-/- ......................................... ITLY 303,000 87,956 0.5
------------
263,456
------------
Cable Television (1.0%)
Matav-Cable Systems Media Ltd. - ADR-/- {\/} .............. ISRL 11,000 166,375 1.0
------------
Conglomerate (0.5%)
First National Bank Holdings Ltd.-/- ...................... SAFR 14,000 76,882 0.5
------------ -----
TOTAL EQUITY INVESTMENTS (cost $14,352,751) ................. 15,742,579 91.2
------------ -----
<CAPTION>
NO. OF % OF NET
RIGHTS COUNTRY RIGHTS ASSETS
- ------------------------------------------------------------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Security Bank Corp. Rights, expire 12/19/96 (cost
$28,521)-/- .............................................. PHIL 28,000 25,610 0.2
------------ -----
BANKS-MONEY CENTER
<CAPTION>
NO. OF % OF NET
WARRANTS COUNTRY WARRANTS ASSETS
- ------------------------------------------------------------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Peregrine Investment Holdings Ltd. Warrants, expire 5/15/98
(cost $0)-/- ............................................. HK 24,500 4,595 --
------------ -----
SECURITIES BROKER
<CAPTION>
% OF NET
REPURCHASE AGREEMENT ASSETS
- ------------------------------------------------------------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1996, with State Street Bank & Trust Co.,
due November 1, 1996, for an effective yield of 5.55%,
collateralized by $510,000 U.S. Treasury Bonds, 7.125% due
2/15/23 (market value of collateral is $538,660, including
accrued interest). (cost $523,081) ....................... 523,081 3.0
------------ -----
TOTAL INVESTMENTS (cost $14,904,353) * ...................... 16,295,865 94.4
Other Assets and Liabilities ................................ 963,793 5.6
------------ -----
NET ASSETS .................................................. $ 17,259,658 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{/\} Security denominated in Great Britain Pounds.
{.} 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 $15,004,209 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 1,748,260
Unrealized depreciation: (456,604)
-------------
Net unrealized appreciation: $ 1,291,656
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, 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>
Australia (AUSL/AUD) ................. 0.7 0.7
Canada (CAN/CAD) ..................... 4.2 4.2
Chile (CHLE/CLP) ..................... 1.4 1.4
Croatia (CRT/HRK) .................... 2.3 2.3
Denmark (DEN/DKK) .................... 6.4 6.4
France (FR/FRF) ...................... 1.1 1.1
Hong Kong (HK/HKD) ................... 3.8 3.8
Indonesia (INDO/IDR) ................. 0.8 0.8
Ireland (IRE/IEP) .................... 3.7 3.7
Israel (ISRL/ILS) .................... 3.2 3.2
Italy (ITLY/ITL) ..................... 0.5 0.5
Japan (JPN/JPY) ...................... 10.1 10.1
Korea (KOR/KRW) ...................... 0.8 0.8
Mexico (MEX/MXN) ..................... 0.7 0.7
Norway (NOR/NOK) ..................... 1.1 1.1
Panama (PAN/PND) ..................... 2.1 2.1
Philippines (PHIL/PHP) ............... 0.8 0.2 1.0
South Africa (SAFR/ZAR) .............. 1.0 1.0
Spain (SPN/ESP) ...................... 1.1 1.1
Sweden (SWDN/SEK) .................... 3.2 3.2
Thailand (THAI/THB) .................. 1.5 1.5
United Kingdom (UK/GBP) .............. 3.7 3.7
United States (US/USD) ............... 35.2 8.6 43.8
Uruguay (URGY/UYP) ................... 1.8 1.8
------ ----- ----- ------
Total ............................... 91.2 0.2 8.6 100.0
------ ----- ----- ------
------ ----- ----- ------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $17,259,658.
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Biotechnology (30.7%)
Amgen, Inc.-/- ............................................ US 503,700 $ 30,883,100 5.0
Protein Design Labs, Inc.{::} -/- ......................... US 1,191,400 28,295,750 4.9
Biogen, Inc.-/- ........................................... US 345,100 25,709,950 4.5
Biochem Pharma, Inc.{\/} -/- .............................. CAN 531,800 22,667,975 3.9
Agouron Pharmaceuticals, Inc.-/- .......................... US 339,300 19,424,925 3.4
Genetics Institute, Inc.-/- ............................... US 278,500 18,241,750 3.2
Centocor, Inc.-/- ......................................... US 446,200 13,107,125 2.3
SangStat Medical Corp.-/- ................................. US 210,000 5,512,500 1.0
Guilford Pharmaceuticals, Inc.-/- ......................... US 133,100 3,826,625 0.7
COR Therapeutics, Inc.-/- ................................. US 302,300 2,720,700 0.5
Myriad Genetics, Inc.-/- .................................. US 91,600 2,267,100 0.4
Lumisys, Inc.-/- .......................................... US 132,000 1,270,500 0.2
Alpha-Beta Technology, Inc.-/- ............................ US 100,000 1,037,500 0.2
Genelabs Technologies, Inc.-/- ............................ US 206,800 840,125 0.2
Genzyme Transgenics Corp. ................................. US 54,600 348,075 0.1
Somatix Therapy Corp.-/- .................................. US 100,000 331,250 0.1
Targeted Genetics Corp.-/- ................................ US 60,000 262,500 0.1
NABI, Inc.-/- ............................................. US 26,000 240,500 --
Enzon, Inc. Preferred-/- .................................. US 16,000 90,800 --
------------
177,078,750
------------
Pharmaceuticals (25.4%)
Astra AB "B" Free ......................................... SWDN 572,000 26,136,623 4.5
Pfizer, Inc. .............................................. US 210,000 17,377,500 3.0
TheraTech, Inc.{::} -/- ................................... US 1,467,000 16,228,688 2.8
Merck & Co., Inc. ......................................... US 180,000 13,342,500 2.3
Sandoz AG - Registered .................................... SWTZ 10,000 11,575,028 2.0
Ciba-Geigy AG - Registered-/- ............................. SWTZ 8,500 10,485,264 1.8
Watson Pharmaceuticals, Inc.-/- ........................... US 280,700 9,368,363 1.6
Zeneca Group PLC .......................................... UK 322,600 8,786,730 1.5
R.P. Scherer Corp.-/- ..................................... US 182,000 8,440,250 1.5
Altana AG ................................................. GER 9,520 7,611,471 1.3
Spiros Development Corp.(.) -/- ........................... US 100,000 5,700,723 1.0
Sonus Pharmaceuticals, Inc.-/- ............................ US 134,500 3,076,688 0.5
Pliva D.D. - Reg. S GDR-/- {c} {\/} ....................... CRT 44,700 2,201,475 0.4
SEQUUS Pharmaceuticals, Inc. .............................. US 127,600 1,794,375 0.3
Catalytica, Inc.-/- ....................................... US 398,600 1,544,575 0.3
Penederm, Inc.-/- ......................................... US 137,500 1,203,125 0.2
Therapeutic Discovery Corp. "A" ........................... US 100,000 1,037,500 0.2
Anesta Corp.-/- ........................................... US 22,500 309,375 0.1
Interneuron Pharmaceuticals ............................... US 10,000 247,500 0.1
------------
146,467,753
------------
Medical Technology & Supplies (22.3%)
Visx, Inc.{::} -/- ........................................ US 939,400 23,719,850 4.1
Circon Corp.{::} -/- ...................................... US 875,400 14,444,100 2.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Medical Technology & Supplies (Continued)
Sunrise Medical, Inc.-/- .................................. US 783,700 $ 11,657,538 2.0
Baxter International, Inc. ................................ US 270,000 11,238,750 2.0
Conmed Corp. .............................................. US 625,000 10,781,250 1.9
Vital Signs, Inc.-/- ...................................... US 335,400 7,127,250 1.2
AVECOR Cardiovascular, Inc.{::} ........................... US 550,800 6,747,300 1.2
Mentor Corp.-/- ........................................... US 288,100 6,374,213 1.1
Advanced Technology Laboratories, Inc.-/- ................. US 193,700 5,907,850 1.0
Neoprobe Corp.-/- ......................................... US 357,200 5,134,750 0.9
Angeion Corp.-/- .......................................... US 650,000 2,762,500 0.5
Utah Medical Products, Inc.-/- ............................ US 202,800 2,585,700 0.5
TECNOL Medical Products, Inc.-/- .......................... US 200,000 2,550,000 0.4
Life Medical Sciences, Inc.{::} -/- ....................... US 450,000 2,418,750 0.4
INAMED Corp.-/- ........................................... US 256,900 2,312,100 0.4
Research Medical, Inc.-/- ................................. US 114,700 2,222,313 0.4
Lifecore Biomedical, Inc.-/- .............................. US 113,900 1,922,063 0.3
General Surgical Innovations, Inc.-/- ..................... US 250,900 1,819,025 0.3
NeoPath, Inc.-/- .......................................... US 75,000 1,223,438 0.2
Eclipse Surgical Technologies, Inc.-/- .................... US 116,500 1,121,313 0.2
Becton, Dickinson & Co. ................................... US 22,800 991,800 0.2
Conceptus, Inc.-/- ........................................ US 75,000 900,000 0.2
KeraVision, Inc.-/- ....................................... US 47,500 736,250 0.1
Endovascular Technologies, Inc.-/- ........................ US 60,000 630,000 0.1
Pharmacopeia, Inc.-/- ..................................... US 17,500 332,500 0.1
Endosonics Corp.-/- ....................................... US 25,000 315,625 0.1
Versa Technologies, Inc. .................................. US 11,200 154,000 --
Innerdyne, Inc.-/- ........................................ US 40,000 122,500 --
Calypte Biomedical Corp.-/- ............................... US 19,000 97,375 --
Optical Sensors, Inc.-/- .................................. US 10,000 87,500 --
Molecular Dynamics, Inc.-/- ............................... US 10,000 75,000 --
Quidel Corp.-/- ........................................... US 10,000 36,875 --
------------
128,549,478
------------
Health Care Services (8.2%)
Quorum Health Group, Inc.-/- .............................. US 360,000 9,720,000 1.7
Health Management Associates, Inc. "A"-/- ................. US 350,000 7,700,000 1.3
Tenet Healthcare Corp.-/- ................................. US 315,300 6,581,888 1.1
Parkway Holdings Ltd. ..................................... SING 1,670,000 6,225,591 1.1
Cohr, Inc.-/- ............................................. US 206,300 5,054,350 0.9
AmeriSource Health Corp. "A"-/- ........................... US 101,500 4,301,063 0.8
Pacificare Health Systems, Inc. "A"-/- .................... US 55,200 3,712,200 0.6
Grupo Casa Autrey, S.A. de C.V. - ADR{\/} ................. MEX 135,100 2,550,013 0.4
Allegiance Corp.-/- ....................................... US 54,000 1,012,500 0.2
Unison Healthcare Corp.-/- ................................ US 50,000 412,500 0.1
------------
47,270,105
------------ -----
TOTAL EQUITY INVESTMENTS (cost $437,287,782) ................ 499,366,086 86.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
ATS Medical Inc. Warrants, expire 3/2/97-/- ............... US 125,000 $ 50,781 --
MEDICAL TECHNOLOGY & SUPPLIES
ALZA Corp. Warrants, expire 12/31/96-/- ................... US 100,000 12,500 --
PHARMACEUTICALS
------------ -----
TOTAL WARRANTS (cost $0) .................................... 63,281 --
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1996, with State Street Bank & Trust Co.,
due November 1, 1996, for an effective yield of 5.55%,
collateralized by 63,055,000 U.S. Treasury Bonds, 7.125%
due 2/15/23 (market value of collateral is $66,598,433,
including accrued interest). (cost $65,289,064) .......... 65,289,064 11.3
------------ -----
TOTAL INVESTMENTS (cost $502,576,846) * ..................... 564,718,431 97.9
Other Assets and Liabilities ................................ 11,915,807 2.1
------------ -----
NET ASSETS .................................................. $576,634,238 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{::} See Note 6 of Notes to Financial Statements.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
(.) Restricted securities. At October 31, 1996, the Fund owned the
following restricted security constituting 1.0% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
<TABLE>
<CAPTION>
VALUE
ACQUISITION ACQUISITION PER SHARE
DESCRIPTION DATE SHARES COST (NOTE 1)
---------------------------------------- ----------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Spiros Development Corp................. 1/3/96 100,000 $ 3,000,000 $57.01
</TABLE>
* For Federal income tax purposes, cost is $503,725,361 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 68,928,144
Unrealized depreciation: (7,935,074)
-------------
Net unrealized appreciation: $ 60,993,070
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, 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) ..................... 3.9 3.9
Croatia (CRT/HRK) .................... 0.4 0.4
Germany (GER/DEM) .................... 1.3 1.3
Mexico (MEX/MXN) ..................... 0.4 0.4
Singapore (SING/SGD) ................. 1.1 1.1
Sweden (SWDN/SEK) .................... 4.5 4.5
Switzerland (SWTZ/CHF) ............... 3.8 3.8
United Kingdom (UK/GBP) .............. 1.5 1.5
United States (US/USD) ............... 69.7 13.4 83.1
-------- ------- --------
Total ............................... 86.6 13.4 100.0
-------- ------- --------
-------- ------- --------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $576,634,238.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ ----------- -------- --------------
<S> <C> <C> <C> <C>
Swiss Francs............................ 11,944,396 1.23274 12/19/96 $ 223,620
Swiss Francs............................ 4,777,759 1.23335 12/19/96 87,040
------------ --------------
Total Contracts to Sell (Receivable
amount $17,032,815).................. 16,722,155 310,660
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 2.90%.
Total Open Forward Foreign Currency Contracts.............................. $ 310,660
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (30.8%)
Edison S.p.A. ............................................. ITLY 450,000 $ 2,682,589 2.9
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{\/} ............... BOL 62,300 2,632,175 2.9
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR{\/} .... BRZL 81,174 2,536,688 2.8
ELECTRICAL & GAS UTILITIES
Enron Global Power & Pipelines L.L.C. ..................... US 90,000 2,531,250 2.7
ELECTRICAL & GAS UTILITIES
IES Industries, Inc. ...................................... US 81,000 2,490,750 2.7
ELECTRICAL & GAS UTILITIES
Empresa Nacional de Electridad S.A. - ADR{\/} ............. SPN 40,000 2,460,000 2.7
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ............... ASTRI 16,800 2,279,651 2.5
ELECTRICAL & GAS UTILITIES
Hub Power Co.-/- .......................................... PAK 2,400,000 2,053,897 2.2
ELECTRICAL & GAS UTILITIES
BSES Ltd. ................................................. IND -- -- 2.1
ELECTRICAL & GAS UTILITIES
GDR-/- {\/} ............................................. -- 80,600 1,491,100 --
Reg. S GDR-/- {\/} ...................................... -- 24,400 451,400 --
Capex S.A. ................................................ ARG 260,000 1,885,377 2.0
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp.: ............................... KOR -- -- 1.7
ELECTRICAL & GAS UTILITIES
Common .................................................. -- 31,000 914,199 --
ADR{\/} ................................................. -- 38,000 684,000 --
MetroGas S.A. - ADR{\/} ................................... ARG 100,000 925,000 1.0
ELECTRICAL & GAS UTILITIES
AES China Generating Co., Ltd. "A"-/- ..................... US 54,100 723,588 0.8
ELECTRICAL & GAS UTILITIES
Hafslund ASA "A" .......................................... NOR 80,800 633,467 0.7
ELECTRICAL & GAS UTILITIES
Edelnor S.A. "B" .......................................... PERU 490,200 532,000 0.6
ELECTRICAL & GAS UTILITIES
Metzler Group, Inc.-/- .................................... US 21,400 498,888 0.5
ENERGY EQUIPMENT & SERVICES
------------
28,406,019
------------
Services (27.2%)
Mannesmann AG ............................................. GER 7,500 2,913,969 3.2
WIRELESS COMMUNICATIONS
Tranz Rail Holdings Ltd. - ADR-/- {\/} .................... NZ 147,200 2,410,400 2.6
TRANSPORTATION - ROAD & RAIL
DDI Corp. ................................................. JPN 295 2,217,753 2.4
WIRELESS COMMUNICATIONS
Telefonica de Espana - ADR{\/} ............................ SPN 34,000 2,048,500 2.2
TELEPHONE NETWORKS
SPT Telecom-/- ............................................ CZCH 19,000 2,034,175 2.2
TELEPHONE NETWORKS
Hellenic Telecommunications - 144A{.} ..................... GREC 110,000 1,944,713 2.1
TELEPHONE NETWORKS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 30,000 $ 1,796,250 1.9
TELEPHONE NETWORKS
ABC Rail Products Corp.-/- ................................ US 115,100 1,740,888 1.9
TRANSPORTATION - ROAD & RAIL
Canadian National Railway Co.{\/} ......................... CAN 60,900 1,674,750 1.8
TRANSPORTATION - ROAD & RAIL
Paging Network, Inc.-/- ................................... US 97,000 1,661,125 1.8
WIRELESS COMMUNICATIONS
PT Indonesia Satellite (Indosat) - ADR{\/} ................ INDO 40,000 1,205,000 1.3
TELEPHONE - LONG DISTANCE
Portugal Telecom S.A. - ADR{\/} ........................... PORT 43,000 1,112,625 1.2
TELEPHONE - REGIONAL/LOCAL
CPT Telefonica Del Peru, S.A. - ADR{\/} ................... PERU 40,900 843,563 0.9
TELEPHONE NETWORKS
Centennial Cellular Corp. "A"-/- .......................... US 50,000 643,750 0.7
WIRELESS COMMUNICATIONS
Pakistan Telecommunications Co., Ltd.: .................... PAK -- -- 0.7
TELEPHONE NETWORKS
GDR-/- {\/} ............................................. -- 4,892 366,900 --
New Voucher-/- .......................................... -- 2,800 226,348 --
Korea Mobile Telecom ...................................... KOR 290 298,535 0.3
WIRELESS COMMUNICATIONS
------------
25,139,244
------------
Materials/Basic Industry (17.2%)
La Cementos Nacional, C.A. 144A - GDR{.} -/- {\/} ......... ECDR 15,060 3,027,060 3.3
CEMENT
Giant Cement Holding, Inc.-/- ............................. US 179,800 2,697,000 2.9
CEMENT
RMI Titanium Co.-/- ....................................... US 106,600 2,571,725 2.8
METALS - NON-FERROUS
Northwest Pipe Co.-/- ..................................... US 127,500 2,199,375 2.4
METALS - STEEL
PT Bakrie and Brothers .................................... INDO 1,170,000 1,733,668 1.9
BUILDING MATERIALS & COMPONENTS
Hylsamex, S.A. de C.V. 144A - ADR{.} {\/} ................. MEX 75,000 1,612,500 1.7
METALS - STEEL
Cimpor-Cimentos de Portugal S.A. .......................... PORT 45,900 965,100 1.0
CEMENT
Siam Cement Co., Ltd. - Foreign ........................... THAI 28,000 957,866 1.0
CEMENT
HI Cement Corp.-/- ........................................ PHIL 439,000 135,514 0.2
CEMENT
------------
15,899,808
------------
Capital Goods (12.9%)
Tadiran Telecommunications Ltd.-/- {\/} ................... ISRL 130,000 2,990,000 3.2
TELECOM EQUIPMENT
ABB AB "B" ................................................ SWDN 22,000 2,456,172 2.7
ELECTRICAL PLANT/EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
United Engineers Ltd. ..................................... MAL 270,000 $ 2,137,767 2.3
CONSTRUCTION
Caterpillar, Inc. ......................................... US 30,000 2,058,750 2.2
MACHINERY & ENGINEERING
KCI Konecranes International-/- ........................... FIN 42,660 1,148,596 1.3
MACHINERY & ENGINEERING
C & P Homes, Inc. ......................................... PHIL 1,497,300 684,739 0.7
CONSTRUCTION
Cheung Kong Infrastructure ................................ HK 264,000 491,690 0.5
CONSTRUCTION
------------
11,967,714
------------
Technology (2.7%)
DSP Communications, Inc. .................................. US 65,900 2,504,200 2.7
------------
TELECOM TECHNOLOGY
Multi-Industry/Miscellaneous (1.6%)
E.R.G. Ltd. ............................................... AUSL 1,503,378 1,476,819 1.6
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $75,266,645) ................. 85,393,804 92.4
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1996, with State Street Bank & Trust Co.,
due November 1, 1996, for an effective yield of 5.55%
collateralized by $5,685,000 U.S. Treasury Bond, 7.875%
due 11/15/07 (market value of collateral is $6,347,502,
including accrued interest). (cost $6,217,958) ........... 6,217,958 6.7
------------ -----
TOTAL INVESTMENTS (cost $81,484,603) * ...................... 91,611,762 99.1
Other Assets and Liabilities ................................ 806,829 0.9
------------ -----
NET ASSETS .................................................. $ 92,418,591 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- 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 $81,484,603 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 15,411,502
Unrealized depreciation: (5,284,343)
-------------
Net unrealized appreciation: $ 10,127,159
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 3.0 3.0
Australia (AUSL/AUD) ................. 1.6 1.6
Austria (ASTRI/ATS) .................. 2.5 2.5
Bolivia (BOL/BOL) .................... 2.9 2.9
Brazil (BRZL/BRL) .................... 2.8 2.8
Canada (CAN/CAD) ..................... 1.8 1.8
Czech Republic (CZCH/CSK) ............ 2.2 2.2
Ecuador (ECDR/ECS) ................... 3.3 3.3
Finland (FIN/FIM) .................... 1.3 1.3
Germany (GER/DEM) .................... 3.2 3.2
Greece (GREC/GRD) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 0.5 0.5
India (IND/INR) ...................... 2.1 2.1
Indonesia (INDO/IDR) ................. 3.2 3.2
Israel (ISRL/ILS) .................... 3.2 3.2
Italy (ITLY/ITL) ..................... 2.9 2.9
Japan (JPN/JPY) ...................... 2.4 2.4
Korea (KOR/KRW) ...................... 2.0 2.0
Malaysia (MAL/MYR) ................... 2.3 2.3
Mexico (MEX/MXN) ..................... 1.7 1.7
New Zealand (NZ/NZD) ................. 2.6 2.6
Norway (NOR/NOK) ..................... 0.7 0.7
Pakistan (PAK/PKR) ................... 2.9 2.9
Peru (PERU/PES) ...................... 1.5 1.5
Philippines (PHIL/PHP) ............... 2.8 2.8
Portugal (PORT/PTE) .................. 2.2 2.2
Spain (SPN/ESP) ...................... 4.9 4.9
Sweden (SWDN/SEK) .................... 2.7 2.7
Thailand (THAI/THB) .................. 1.0 1.0
United States (US/USD) ............... 24.1 7.6 31.7
------ ----- ----------
Total ............................... 92.4 7.6 100.0
------ ----- ----------
------ ----- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $92,418,591.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- --------- -------- ------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 1,720,879 1.46900 11/29/96 $49,033
Japanese Yen............................ 339,752 106.30000 11/12/96 23,748
Japanese Yen............................ 291,769 110.00000 01/07/97 6,958
-------------- ------------
Total Contracts to Sell (Receivable
amount $2,432,139)................... 2,352,400 79,739
-------------- ------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 2.55%.
Total Open Forward Foreign Currency
Contracts............................ $79,739
------------
------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy Equipment & Services (26.8%)
Veritas DGC, Inc. ......................................... US -- -- 5.6
Common-/- ............................................... -- 158,200 $ 3,243,100 --
Common-/- {/\} .......................................... -- 157,200 3,048,557 --
Rowan Cos., Inc.-/- ....................................... US 165,900 3,712,013 3.3
Energy Ventures, Inc.-/- .................................. US 81,300 3,577,200 3.2
Western Atlas, Inc.-/- .................................... US 49,900 3,461,813 3.1
Global Marine, Inc.-/- .................................... US 179,900 3,305,663 3.0
Seacor Holdings, Inc.-/- .................................. US 59,100 3,191,400 2.8
Input/Output, Inc.-/- ..................................... US 84,700 2,519,825 2.3
Tuboscope Vetco International Corp.-/- .................... US 119,100 1,816,275 1.6
Reading & Bates Corp.-/- .................................. US 43,000 1,236,250 1.1
Weatherford Enterra, Inc.-/- .............................. US 32,300 936,700 0.8
------------
30,048,796
------------
Oil (25.8%)
Ente Nazionale Idrocarburi (ENI) S.p.A. - ADR{\/} ......... ITLY 147,700 7,015,750 6.3
Benton Oil & Gas Co.-/- ................................... US 149,800 3,670,100 3.3
Abacan Resource Corp.-/- .................................. CAN 475,900 3,602,883 3.2
Cooper Cameron Corp.-/- ................................... US 53,200 3,398,150 3.0
Rutherford-Moran Oil Corp.-/- ............................. US 91,600 2,725,100 2.4
BJ Services Co.-/- ........................................ US 47,000 2,109,125 1.9
Petroleum Securities Australia Ltd. ....................... AUSL -- -- 1.5
Common-/- ............................................... -- 248,137 1,014,329 --
ADR-/- {\/} ............................................. -- 32,000 652,000 --
Basic Petroleum International Ltd.-/- ..................... US 52,800 1,610,400 1.4
Canadian 88 Energy Corp.-/- ............................... CAN 346,200 1,471,873 1.3
HarCor Energy, Inc.-/- .................................... US 239,900 1,229,488 1.1
Petroleo Brasileiro S.A. (Petrobras) Preferred-/- ......... BRZL 3,750,000 485,496 0.4
------------
28,984,694
------------
Gold (12.4%)
Bre-X Minerals Ltd.-/- .................................... CAN 191,700 3,202,864 2.9
Greenstone Resources Ltd.-/- .............................. CAN 219,400 2,781,980 2.5
Meridian Gold, Inc.-/- .................................... CAN 564,000 2,439,919 2.2
Getchell Gold Corp.-/- .................................... US 45,800 2,038,100 1.8
Oryx Gold Holdings Ltd.-/- ................................ SAFR 824,300 1,300,879 1.2
Asquith Resources, Inc.-/- ................................ CAN 487,400 908,854 0.8
HJ Joel Mining Co., Ltd.-/- ............................... SAFR 549,900 603,964 0.5
Arian Resources Corp.-/-{\/} .............................. CAN 200,000 290,000 0.3
Arizona Star Resource Corp.-/- ............................ CAN 16,200 97,270 0.1
Bema Gold Corp.-/- ........................................ CAN 10,900 65,447 0.1
Bro-X Minerals Ltd.-/- .................................... CAN 19,070 55,473 --
------------
13,784,750
------------
Gas Production & Distribution (11.8%)
Atwood Oceanics, Inc.-/- .................................. US 63,000 3,496,500 3.1
Triton Energy Ltd.-/- ..................................... US 71,400 3,186,225 2.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Gas Production & Distribution (Continued)
Chesapeake Energy Corp.-/- ................................ US 54,600 $ 3,180,450 2.8
Enterprise Oil PLC ........................................ UK 247,700 2,242,842 2.0
Falcon Drilling Co., Inc.-/- .............................. US 33,000 1,167,375 1.0
------------
13,273,392
------------
Chemicals (4.7%)
Monsanto Co. .............................................. US 77,300 3,063,013 2.7
Cytec Industries, Inc.-/- ................................. US 61,800 2,209,350 2.0
------------
5,272,363
------------
Metals - Steel (4.7%)
UCAR International, Inc.-/- ............................... US 70,900 2,773,963 2.5
SGL Carbon AG ............................................. GER 22,100 2,489,791 2.2
------------
5,263,754
------------
Metals - Non-Ferrous (2.5%)
PT Tambang Timah: ......................................... INDO -- -- 1.6
144A GDR{.} {\/} ........................................ -- 97,200 1,484,730 --
Reg. S GDR{c} {\/} ...................................... -- 20,000 305,500 --
International Curator Resources Ltd.-/- ................... CAN 100,000 950,996 0.9
------------
2,741,226
------------
Energy Sources (1.9%)
Transocean Offshore, Inc.-/- .............................. US 33,300 2,106,225 1.9
------------
Misc. Materials & Commodities (1.6%)
Aber Resources Ltd.-/- .................................... CAN 88,200 1,374,938 1.2
Yamana Resources, Inc.-/-{\/} ............................. US 162,400 442,127 0.4
------------
1,817,065
------------
Transportation - Shipping (1.1%)
Trico Marine Services, Inc.-/- ............................ US 36,200 1,276,050 1.1
------------
Miscellaneous (1.1%)
Orogen Minerals Ltd. - 144A ADR{.} -/- {\/} ............... AUSL 82,000 1,230,000 1.1
------------ -----
TOTAL EQUITY INVESTMENTS (cost $90,052,470) ................. 105,798,315 94.4
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Yamana Resources, Inc. Warrants, expire 12/31/98-/- ....... US 81,200 85,393 0.1
MISC. MATERIALS & COMMODITIES
Arian Resources Corp. Warrants, expire 3/29/97-/- {\/} .... CAN 100,000 -- --
GOLD
------------ -----
TOTAL WARRANTS (cost $65,108) ............................... 85,393 0.1
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1996, with State Street Bank & Trust Co.,
due November 1, 1996, for an effective yield of 5.55%,
collateralized by $5,390,000 U.S. Treasury Bonds, 7.125%
due 2/15/23 (market value of collateral is $5,692,896,
including accrued interest). (cost $5,576,860) ........... $ 5,576,860 5.0
------------ -----
TOTAL INVESTMENTS (cost $95,694,438) * ...................... 111,460,568 99.5
Other Assets and Liabilities ................................ 518,655 0.5
------------ -----
NET ASSETS .................................................. $111,979,223 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{/\} Security is denominated in Canadian Dollars.
-/- 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.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $96,324,663 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 16,474,023
Unrealized depreciation: (1,338,118)
-------------
Net unrealized appreciation: $ 15,135,905
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, 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>
Australia (AUSL/AUD) ................. 2.6 2.6
Brazil (BRZL/BRL) .................... 0.4 0.4
Canada (CAN/CAD) ..................... 15.5 15.5
Germany (GER/DEM) .................... 2.2 2.2
Indonesia (INDO/IDR) ................. 1.6 1.6
Italy (ITLY/ITL) ..................... 6.3 6.3
South Africa (SAFR/ZAR) .............. 1.7 1.7
United Kingdom (UK/GBP) .............. 2.0 2.0
United States (US/USD) ............... 62.1 0.1 5.5 67.7
------ ----- ----- -----
Total ............................... 94.4 0.1 5.5 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $111,979,223.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 529,501 1.46900 11/29/96 $ 15,087
------------ --------------
Total Contracts to Sell (Receivable
amount $544,588)..................... 529,501 15,087
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 0.47%.
Total Open Forward Foreign Currency
Contracts............................ $ 15,087
--------------
--------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telecom Equipment (25.4%)
L.M. Ericsson Telephone Co.: ............................ SWDN -- -- 4.0
ADR ................................................... -- 2,327,300 $ 64,291,657 --
"B" Free .............................................. -- 871,200 23,619,465 --
Newbridge Networks Corp.-/- {\/} ........................ CAN 2,664,800 84,274,300 3.8
Nokia AB "A" ............................................ FIN 1,524,160 70,469,527 3.2
ECI Telecommunications Ltd.{\/} ......................... ISRL 2,879,500 57,590,000 2.6
Andrew Corp.-/- ......................................... US 647,350 31,558,313 1.4
ICG Communications, Inc.-/- ............................. US 1,254,600 23,523,750 1.1
ANTEC Corp.{::} -/- ..................................... US 2,162,300 23,109,581 1.0
Mitel Corp.-/- {\/} ..................................... CAN 2,798,100 18,887,175 0.9
Geotek Communications, Inc.-/- .......................... US 2,471,100 18,224,363 0.8
EchoStar Communications Corp. "A"-/- .................... US 609,200 17,971,400 0.8
DSC Communications Corp.-/- ............................. US 1,220,100 16,928,888 0.8
Tekelec{::} -/- ......................................... US 1,084,100 15,990,475 0.7
General Instrument Corp.-/- ............................. US 750,000 15,093,750 0.7
Tadiran Ltd. - ADR{\/} .................................. ISRL 435,600 11,434,500 0.5
Octel Communications Corp.-/- ........................... US 704,600 11,185,525 0.5
Champion Technology Holding Ltd. ........................ HK 73,439,163 9,688,419 0.4
Gandalf Technologies, Inc.{::} -/- {\/} ................. CAN 2,800,000 9,625,000 0.4
BroadBand Technologies, Inc.-/- ......................... US 492,300 8,799,863 0.4
Spectrian Corp.{::} -/- ................................. US 792,500 7,925,000 0.4
Scientific-Atlanta, Inc. ................................ US 537,700 7,796,650 0.4
Allen Group, Inc.-/- .................................... US 300,000 4,762,500 0.2
Motorola, Inc. .......................................... US 100,000 4,600,000 0.2
Netas Telekomunik ....................................... TRKY 17,820,000 4,306,361 0.2
--------------
561,656,462
--------------
Wireless Communications (20.7%)
DDI Corp. ............................................... JPN 13,320 100,137,167 4.5
Mannesmann AG ........................................... GER 160,900 62,514,339 2.8
Millicom International Cellular S.A.-/- {\/} ............ LUX 1,057,000 42,015,750 1.9
Korea Mobile Telecommunications: ........................ KOR -- -- 1.4
Common ................................................ -- 16,940 17,438,538 --
ADR{\/} ............................................... -- 990,000 12,375,000 --
Advanced Info. Service - Foreign ........................ THAI 1,993,150 27,054,920 1.2
Nextel Communications, Inc. "A"-/- ...................... US 1,585,700 25,371,200 1.1
Shinawatra Computer Co., Ltd. - Foreign ................. THAI 1,399,100 22,613,935 1.0
Vodafone Group PLC ...................................... UK 5,795,000 22,393,630 1.0
Telecom Italia Mobile S.p.A. - Di Risp .................. ITLY 14,630,000 16,780,821 0.7
United Communication Industry - Foreign ................. THAI 1,967,800 16,366,167 0.7
Telephone and Data Systems, Inc. ........................ US 408,500 14,297,500 0.7
Grupo Iusacell S.A. - "L" ADR-/- {\/} ................... MEX 1,672,100 12,749,763 0.6
Clearnet Communications, Inc. "A"-/- {\/} ............... CAN 797,000 11,755,750 0.5
International Engineering PLC - Foreign{::} ............. THAI 3,057,700 11,036,030 0.5
Tele 2000 S.A.{::} -/- .................................. PERU 7,043,222 10,919,724 0.5
Olivetti Group-/- ....................................... ITLY 30,086,997 8,733,725 0.4
WinStar Communications, Inc.-/- ......................... US 405,700 8,519,700 0.4
</TABLE>
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Wireless Communications (Continued)
Western Wireless Corp. "A"-/- ........................... US 479,000 $ 7,903,500 0.4
Intercel, Inc.-/- ....................................... US 365,000 6,113,750 0.3
American Portable Telecom, Inc.-/- ...................... US 230,000 1,753,750 0.1
--------------
458,844,659
--------------
Telephone Networks (15.6%)
SPT Telecom-/- .......................................... CZCH 445,090 47,652,155 2.1
Stet Societa' Finanziaria Telefonica S.p.A. - Di Risp ... ITLY 16,820,000 44,909,248 2.0
Nippon Telegraph & Telephone Corp. ...................... JPN 6,120 42,780,269 1.9
Telefonica de Argentina S.A. "B" - ADR{\/} .............. ARG 1,668,000 38,781,000 1.7
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 477,800 35,596,100 1.6
Telecom Italia S.p.A.: .................................. ITLY -- -- 1.5
Di Risp ............................................... -- 12,172,000 23,057,683 --
Common ................................................ -- 4,274,001 9,562,242 --
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ..... PAK 225,437 16,907,775 0.8
Telecom Argentina S.A. - ADR{\/} ........................ ARG 432,200 16,315,550 0.7
Hellenic Telecommunications - 144A{.} ................... GREC 880,000 15,557,704 0.7
TelecomAsia Corp. - Foreign-/- .......................... THAI 6,622,652 12,730,873 0.6
Atlantic Tele-Network, Inc.{::} -/- ..................... US 610,100 10,753,013 0.5
PT Indonesia Satellite (Indosat) - ADR{\/} .............. INDO 300,000 9,037,500 0.4
CPT Telefonica De Peru - ADR{\/} ........................ PERU 414,000 8,538,750 0.4
Russian Telecommunications Development Corp.: ........... RUS -- -- 0.4
Non-Voting(.) -/- {\/} (::) ........................... -- 453,000 4,530,000 --
Voting(.) -/- {\/} (::) ............................... -- 331,000 3,310,000 --
PLD Telekon, Inc.-/- {\/} ............................... CAN 510,000 3,378,750 0.2
Jasmine International Public Co., Ltd. - Foreign ........ THAI 560,400 1,538,956 0.1
--------------
344,937,568
--------------
Telephone - Regional/Local (5.9%)
MFS Communications Co., Inc.-/- ......................... US 2,244,900 112,525,613 5.0
Intermedia Communications of Florida, Inc.{::} -/- ...... US 593,900 19,004,800 0.9
--------------
131,530,413
--------------
Networking (5.5%)
3Com Corp.-/- ........................................... US 1,500,000 101,437,500 4.6
Bay Networks, Inc.-/- ................................... US 1,000,000 20,250,000 0.9
--------------
121,687,500
--------------
Broadcasting & Publishing (5.0%)
Granada Group PLC ....................................... UK 1,500,000 21,562,805 1.0
Grupo Televisa, S.A. de C.V. - GDR-/- {\/} .............. MEX 800,000 21,000,000 1.0
Canal Plus .............................................. FR 84,390 20,905,536 0.9
Sistem Televisyen Malaysia Bhd. ......................... MAL 7,436,000 16,779,572 0.8
Time Warner, Inc. ....................................... US 283,200 10,549,200 0.5
Home Shopping Network, Inc.-/- .......................... US 800,600 8,106,075 0.4
Tele-Communications Liberty Media Group, Inc. "A"-/- .... US 231,800 5,968,850 0.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Broadcasting & Publishing (Continued)
International Broadcasting Corp., Ltd. - Foreign-/- ..... THAI 1,741,900 $ 2,921,390 0.1
--------------
107,793,428
--------------
Cable Television (4.4%)
Nynex CableComms Group: ................................. UK -- -- 1.3
Units-/- .............................................. -- 15,134,000 27,948,405 --
ADR-/- {\/} ........................................... -- 98,900 1,818,833 --
Comcast Corp. "A" ....................................... US 1,704,300 25,138,425 1.1
International CableTel, Inc.-/- ......................... US 855,833 20,326,034 0.9
Bell Cablemedia PLC - ADR-/- {\/} ....................... UK 963,300 15,653,625 0.7
Comcast UK Cable Partners Ltd. "A"-/- ................... US 415,000 5,239,375 0.2
United International Holdings, Inc. "A"-/- .............. US 373,000 4,569,250 0.2
--------------
100,693,947
--------------
Telecom Technology (3.3%)
Kyushu-Matsushita Electric Co., Ltd. .................... JPN 1,861,000 28,635,804 1.3
Murata Manufacturing Co., Ltd. .......................... JPN 881,000 28,351,886 1.3
DSP Communications, Inc.{::} -/- ........................ US 408,200 15,511,600 0.7
--------------
72,499,290
--------------
Aerospace/Defense (2.1%)
Orbital Sciences Corp.{::} -/- .......................... US 2,163,500 45,433,500 2.1
--------------
Multi-Industry (1.8%)
Grupo Carso, S.A. de C.V. "A1"-/- ....................... MEX 8,795,000 40,027,120 1.8
--------------
Semiconductors (1.6%)
LSI Logic Corp.-/- ...................................... US 1,300,000 34,450,000 1.6
--------------
Consumer Electronics (1.4%)
Amcol Holdings Ltd.(::) ................................. SING 10,644,000 14,209,132 0.6
Three-Five Systems, Inc.{::} -/- ........................ US 749,000 9,268,875 0.4
Sapura Telecommunications Bhd. .......................... MAL 4,730,000 7,490,103 0.3
Himachal Futuristic Communications Ltd. - 144A GDR{.} -/-
{\/} ................................................... IND 2,248,000 1,978,240 0.1
--------------
32,946,350
--------------
Telecom - Other (1.0%)
Carso Global Telecom "A1"-/- ............................ MEX 8,975,683 21,823,668 1.0
--------------
Telephone - Long Distance (0.9%)
Call-Net Enterprises, Inc.: ............................. CAN -- -- 0.9
"B"-/- ................................................ -- 1,036,700 10,825,539 --
"A"-/- ................................................ -- 519,400 5,617,439 --
144A{.} -/- ........................................... -- 379,400 3,961,811 --
--------------
20,404,789
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Industrial Components (0.8%)
Oak Industries, Inc.-/- ................................. US 577,800 $ 14,661,675 0.6
PT Kabelindo Murni - Foreign{::} ........................ INDO 4,000,000 1,460,293 0.1
PT Kabelmetal Indonesia - Local ......................... INDO 2,600,000 1,116,695 0.1
--------------
17,238,663
--------------
Automobiles (0.4%)
Edaran Otomobil Nasional Bhd. ........................... MAL 983,000 9,184,006 0.4
--------------
Other Financial (0.1%)
Phatra Thanakit Co., Ltd. - Foreign ..................... THAI 619,500 2,296,695 0.1
--------------
Software (0.1%)
Quarterdeck Corp.-/- .................................... US 248,100 1,271,513 0.1
--------------
Retailers-Other (0.0%)
Gran Cadena de Almacenes Colombianos S.A. ............... COL 64,000 58,048 --
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $2,035,304,624) ............ 2,124,777,619 96.0
-------------- -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Structured Notes (1.1%)
Russia (1.1%)
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 25,854,500 1.1
--------------
Corporate Bonds (0.1%)
Malaysia (0.1%)
Sapura Telecommunications Bhd., Convertible Bond, 2%
due 12/31/00 ......................................... MYR 3,547,500 1,249,911 0.1
-------------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,399,408) .......... 27,104,411 1.2
-------------- -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
American Satellite Network Warrants, expire 1/1/99
(cost$0)-/- (::) ....................................... US 65,825 -- --
-------------- -----
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1996, with State Street Bank & Trust
Co., due November 1, 1996, for an effective yield of
5.55%, collateralized by $14,665,000 U.S. Treasury
Bonds, 7.125% due 2/15/23 (market value of collateral is
$15,489,113, including accrued interest). (cost
$15,183,346) ........................................... $ 15,183,346 0.7
-------------- -----
TOTAL INVESTMENTS (cost $2,058,887,378) * ................. 2,167,065,376 97.9
Other Assets and Liabilities .............................. 45,961,289 2.1
-------------- -----
NET ASSETS ................................................ $2,213,026,665 100.0
-------------- -----
-------------- -----
</TABLE>
- --------------
-/- 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.
(::) Valued in good faith at fair value using procedures approved by the
board of directors (See Note 1 of Notes to Financial Statements).
(.) Restricted securities. At October 31, 1996, the Fund owned the
following restricted securities constituting 0.4% of net assets
which may not be publicly sold without registration under the
Securities Act of 1933 (Note 1). Additional information on
restricted securities are as follows:
<TABLE>
<CAPTION>
VALUE
ACQUISITION PER
DESCRIPTION ACQUISITION DATE SHARES COST SHARE
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
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
</TABLE>
* For Federal income tax purposes, cost is $2,061,952,105 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 477,822,867
Unrealized depreciation: (372,709,596)
-------------
Net unrealized appreciation: $ 105,113,271
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, 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) .................. 2.4 2.4
Brazil (BRZL/BRL) .................... 1.6 1.6
Canada (CAN/CAD) ..................... 6.7 6.7
Czech Republic (CZCH/CSK) ............ 2.1 2.1
Finland (FIN/FIM) .................... 3.2 3.2
France (FR/FRF) ...................... 0.9 0.9
Germany (GER/DEM) .................... 2.8 2.8
Greece (GREC/GRD) .................... 0.7 0.7
Hong Kong (HK/HKD) ................... 0.4 0.4
India (IND/INR) ...................... 0.1 0.1
Indonesia (INDO/IDR) ................. 0.6 0.6
Israel (ISRL/ILS) .................... 3.1 3.1
Italy (ITLY/ITL) ..................... 4.6 4.6
Japan (JPN/JPY) ...................... 9.0 9.0
Korea (KOR/KRW) ...................... 1.4 1.4
Luxembourg (LUX/LUF) ................. 1.9 1.9
Malaysia (MAL/MYR) ................... 1.5 0.1 1.6
Mexico (MEX/MXN) ..................... 4.4 4.4
Pakistan (PAK/PKR) ................... 0.8 0.8
Peru (PERU/PES) ...................... 0.9 0.9
Russia (RUS/SUR) ..................... 0.4 1.1 1.5
Singapore (SING/SGD) ................. 0.6 0.6
Sweden (SWDN/SEK) .................... 4.0 4.0
Thailand (THAI/THB) .................. 4.3 4.3
Turkey (TRKY/TRL) .................... 0.2 0.2
United Kingdom (UK/GBP) .............. 4.0 4.0
United States (US/USD) ............... 33.4 2.8 36.2
--------- ----- ----- ---------
Total ............................... 96.0 1.2 2.8 100.0
--------- ----- ----- ---------
--------- ----- ----- ---------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $2,213,026,665.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO BUY: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs 1,370,120 5.14010 11/19/96 $ 8,279
------------ --------------
Total Contracts to Buy (Payable amount
$1,361,841).......................... 1,370,120 8,279
------------ --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.06%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 36,403,205 1.46900 11/29/96 1,037,231
French Francs........................... 15,658,510 5.05905 11/19/96 154,736
Japanese Yen............................ 14,261,848 106.41100 11/12/96 980,937
Japanese Yen............................ 31,759,430 106.41100 11/12/96 2,184,429
Japanese Yen............................ 2,229,844 110.00000 1/07/97 53,174
------------ --------------
Total Contracts to Sell (Receivable
amount $104,723,144)................. 100,312,837 4,410,507
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 4.53%.
Total Open Forward Foreign Currency Contracts, Net......................... $4,418,786
--------------
--------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER NATURAL
PRODUCTS AND FINANCIAL INFRASTRUCTURE RESOURCES
SERVICES FUND- SERVICES FUND- HEALTH FUND- FUND-
CONSOLIDATED CONSOLIDATED CARE CONSOLIDATED CONSOLIDATED
(NOTE 1) (NOTE 1) FUND (NOTE 1) (NOTE 1)
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost............................ $156,514,774 $14,381,272 $437,287,782 $ 75,266,645 $ 90,117,578
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
At value...................................... $165,777,735 $15,772,784 $499,429,367 $ 85,393,804 $105,883,708
Repurchase agreement, at value and cost (Note
1)............................................. 10,575,630 523,081 65,289,064 6,217,958 5,576,860
U.S. currency................................... 589 559 807 613 610
Foreign currencies (cost $229, $367,172,
$30,826, $87,210, $0, and $4,844,257,
respectively).................................. 244 370,106 30,766 85,042 --
Dividends and dividend withholding tax reclaims
receivable..................................... 54,386 18,230 151,779 56,171 2,230
Interest receivable............................. -- -- -- -- --
Receivable for forward foreign currency
contracts -- closed (Note 1)................... 1,301 -- 7,862 -- --
Receivable for Fund shares sold................. 2,751,357 930,632 26,125,858 675,763 2,205,515
Receivable for open forward foreign currency
contracts, net (Note 1)........................ -- -- 310,660 79,739 15,087
Receivable for securities sold.................. 160,000 313,698 5,341,038 447,146 4,361,795
Unamortized organizational costs (Note 1)....... 32,564 32,566 -- 26,580 26,525
Miscellaneous receivable........................ -- -- 12,890 -- --
Cash held as collateral for securities loaned
(Note 1)....................................... 10,659,295 805,810 21,329,702 7,455,555 3,777,600
-------------- -------------- ------------ -------------- ------------
Total assets.................................. 190,013,101 18,767,466 618,029,793 100,438,371 121,849,930
-------------- -------------- ------------ -------------- ------------
Liabilities:
Due to custodian................................ -- -- -- -- 8,709
Payable for custodian fees (Note 1)............. 2,063 272 6,150 9,020 5,312
Payable for Directors' and Trustees' fees and
expenses
(Note 2)....................................... 6,279 6,378 7,119 9,488 6,401
Payable for fund accounting fees (Note 2)....... 3,495 322 11,566 1,882 2,093
Payable for Fund shares repurchased (Note 2).... 517,537 102,280 895,196 103,995 2,118,238
Payable for investment management and
administration fees (Note 2)................... 138,354 2,560 471,859 77,016 84,624
Payable for printing and postage expenses....... 32,438 18,382 103,881 46,232 34,516
Payable for professional fees................... 49,782 38,114 61,605 52,463 45,047
Payable for registration and filing fees........ 2,715 7,444 16,637 4,674 4,491
Payable for securities purchased................ 6,154,529 501,995 18,051,876 164,460 3,692,099
Payable for service and distribution expenses
(Note 2)....................................... 103,066 10,634 288,857 62,404 63,963
Payable for transfer agent fees (Note 2)........ 46,516 4,998 137,193 27,203 19,697
Other accrued expenses.......................... 46,125 8,519 13,914 5,288 7,817
Collateral for securities loaned (Note 1)....... 10,659,295 805,810 21,329,702 7,455,555 3,777,600
-------------- -------------- ------------ -------------- ------------
Total liabilities............................. 17,762,194 1,507,708 41,395,555 8,019,680 9,870,607
Minority interest (Notes 1 & 2)................. 100 100 -- 100 100
-------------- -------------- ------------ -------------- ------------
Net assets........................................ $172,250,807 $17,259,658 $576,634,238 $ 92,418,591 $111,979,223
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
<CAPTION>
TELECOM-
MUNICATIONS
FUND
--------------
<S> <C>
Assets:
Investments in securities: (Note 1)
At identified cost............................ $2,043,704,032
--------------
--------------
At value...................................... $2,151,882,030
Repurchase agreement, at value and cost (Note
1)............................................. 15,183,346
U.S. currency................................... 274
Foreign currencies (cost $229, $367,172,
$30,826, $87,210, $0, and $4,844,257,
respectively).................................. 4,826,005
Dividends and dividend withholding tax reclaims
receivable..................................... 665,209
Interest receivable............................. 139,474
Receivable for forward foreign currency
contracts -- closed (Note 1)................... --
Receivable for Fund shares sold................. 53,176,602
Receivable for open forward foreign currency
contracts, net (Note 1)........................ 4,418,786
Receivable for securities sold.................. 7,959,285
Unamortized organizational costs (Note 1)....... --
Miscellaneous receivable........................ 8,542
Cash held as collateral for securities loaned
(Note 1)....................................... 222,733,129
--------------
Total assets.................................. 2,460,992,682
--------------
Liabilities:
Due to custodian................................ --
Payable for custodian fees (Note 1)............. 11,725
Payable for Directors' and Trustees' fees and
expenses
(Note 2)....................................... 3,702
Payable for fund accounting fees (Note 2)....... 45,056
Payable for Fund shares repurchased (Note 2).... 18,334,671
Payable for investment management and
administration fees (Note 2)................... 1,813,363
Payable for printing and postage expenses....... 392,798
Payable for professional fees................... 51,371
Payable for registration and filing fees........ 17,038
Payable for securities purchased................ 2,479,350
Payable for service and distribution expenses
(Note 2)....................................... 1,421,742
Payable for transfer agent fees (Note 2)........ 638,786
Other accrued expenses.......................... 23,286
Collateral for securities loaned (Note 1)....... 222,733,129
--------------
Total liabilities............................. 247,966,017
Minority interest (Notes 1 & 2)................. --
--------------
Net assets........................................ $2,213,026,665
--------------
--------------
</TABLE>
F27
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF ASSETS
AND LIABILITIES (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER NATURAL
PRODUCTS AND FINANCIAL INFRASTRUCTURE RESOURCES
SERVICES FUND- SERVICES FUND- HEALTH FUND- FUND-
CONSOLIDATED CONSOLIDATED CARE CONSOLIDATED CONSOLIDATED
(NOTE 1) (NOTE 1) FUND (NOTE 1) (NOTE 1)
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Class A:
Net assets...................................... $ 76,899,940 $ 7,301,731 $467,860,558 $ 38,397,219 $ 48,728,791
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Shares outstanding.............................. 3,665,880 514,137 19,822,541 2,663,494 2,795,302
Net asset value and redemption price per
share.......................................... $ 20.98 $ 14.20 $ 23.60 $ 14.42 $ 17.43
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Maximum offering price per share (100/95.25 of
Class A net asset value) *..................... $ 22.03 $ 14.91 $ 24.78 $ 15.14 $ 18.30
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Class B:+
Net assets...................................... $ 87,904,447 $ 9,886,172 $107,622,082 $ 53,677,528 $ 57,748,785
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Shares outstanding.............................. 4,229,101 702,892 4,649,095 3,768,398 3,340,490
Net asset value and offering price per share.... $ 20.79 $ 14.06 $ 23.15 $ 14.24 $ 17.29
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Advisor Class:
Net assets...................................... $ 7,446,420 $ 71,755 $ 1,151,688 $ 343,844 $ 5,501,647
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Shares outstanding.............................. 352,047 5,031 48,446 23,685 314,997
Net asset value, offering price per share, and
redemption price per share..................... $ 21.15 $ 14.26 $ 23.77 $ 14.52 $ 17.47
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Net assets consist of:
Paid in capital (Note 4)........................ $155,328,612 $14,559,393 $472,931,662 $ 77,651,961 $ 92,455,436
Undistributed net investment income............. -- -- -- -- --
Accumulated net realized gain on investments and
foreign currency transactions.................. 7,659,347 1,301,123 41,248,577 4,567,246 3,740,782
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies............................. (113) 7,630 312,414 72,225 16,875
Net unrealized appreciation of investments...... 9,262,961 1,391,512 62,141,585 10,127,159 15,766,130
-------------- -------------- ------------ -------------- ------------
Total -- representing net assets applicable to
capital shares outstanding....................... $172,250,807 $17,259,658 $576,634,238 $ 92,418,591 $111,979,223
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
<CAPTION>
TELECOM-
MUNICATIONS
FUND
--------------
<S> <C>
Class A:
Net assets...................................... $1,204,427,814
--------------
--------------
Shares outstanding.............................. 72,150,592
Net asset value and redemption price per
share.......................................... $ 16.69
--------------
--------------
Maximum offering price per share (100/95.25 of
Class A net asset value) *..................... $ 17.52
--------------
--------------
Class B:+
Net assets...................................... $1,007,654,047
--------------
--------------
Shares outstanding.............................. 61,550,681
Net asset value and offering price per share.... $ 16.37
--------------
--------------
Advisor Class:
Net assets...................................... $ 944,804
--------------
--------------
Shares outstanding.............................. 56,192
Net asset value, offering price per share, and
redemption price per share..................... $ 16.81
--------------
--------------
Net assets consist of:
Paid in capital (Note 4)........................ $1,928,891,755
Undistributed net investment income............. 5,534
Accumulated net realized gain on investments and
foreign currency transactions.................. 171,566,775
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies............................. 4,384,603
Net unrealized appreciation of investments...... 108,177,998
--------------
Total -- representing net assets applicable to
capital shares outstanding....................... $2,213,026,665
--------------
--------------
<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.
F28
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER NATURAL
PRODUCTS AND FINANCIAL HEALTH INFRASTRUCTURE RESOURCES
SERVICES FUND- SERVICES FUND- CARE FUND- FUND-
CONSOLIDATED CONSOLIDATED FUND CONSOLIDATED CONSOLIDATED
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax
of $6,469, $14,755, $180,801, $121,927, $14,864,
and $1,982,953, respectively)................... $ 359,427 $ 298,448 $ 4,282,409 $ 1,455,213 $ 279,542
Interest income.................................. 286,745 82,401 1,726,617 249,111 103,047
Other income..................................... -- -- 137,615 -- --
-------------- -------------- ------------ -------------- ------------
Total investment income........................ 646,172 380,849 6,146,641 1,704,324 382,589
-------------- -------------- ------------ -------------- ------------
Expenses:
Investment management and administration fees
(Note 2)........................................ 570,263 134,856 5,495,494 854,191 573,359
Amortization of organization costs (Note 1)...... 10,329 12,656 -- 10,328 10,329
Audit fees....................................... 43,914 50,836 67,326 59,469 60,546
Custodian Fees (Note 1).......................... 54,316 9,966 105,999 90,835 42,780
Directors' and Trustees' fees and expenses (Note
2).............................................. 10,248 18,836 19,532 16,836 19,336
Fund accounting fees (Note 2).................... 14,778 3,493 141,582 21,910 14,761
Insurance expenses............................... -- -- 4,691 2,912 --
Legal fees....................................... 27,084 22,744 23,816 26,626 26,268
Printing and postage expenses.................... 72,698 42,822 181,817 69,906 57,462
Registration and filing fees..................... 43,398 38,908 109,174 41,516 37,568
Service and distribution expenses: (Note 2)
Class A........................................ 144,407 31,297 2,335,519 177,035 139,991
Class B........................................ 285,201 76,454 969,596 518,147 296,729
Transfer agent fees (Note 2)..................... 234,686 53,854 1,414,082 323,010 212,761
Other expenses................................... 4,241 14,142 3,875 12,156 7,917
-------------- -------------- ------------ -------------- ------------
Total expenses before reductions............... 1,515,563 510,864 10,872,503 2,224,877 1,499,807
-------------- -------------- ------------ -------------- ------------
Expenses reimbursed by Chancellor LGT Asset
Management, Inc. (Note 2)................... -- (138,132) -- -- --
Expense reductions (Notes 1 & 5)............. (62,446) (10,706) (217,027) (98,566) (61,692)
-------------- -------------- ------------ -------------- ------------
Total net expenses............................. 1,453,117 362,026 10,655,476 2,126,311 1,438,115
-------------- -------------- ------------ -------------- ------------
Net investment income (loss)....................... (806,945) 18,823 (4,508,835) (421,987) (1,055,526)
-------------- -------------- ------------ -------------- ------------
Net realized and unrealized gain on investments and
foreign currencies: (Note 1)
Net realized gain on investments................. 8,408,399 1,705,569 174,045,838 4,996,832 7,289,530
Net realized gain on foreign currency
transactions.................................... 64,343 58,811 2,843,700 311,306 27,175
-------------- -------------- ------------ -------------- ------------
Net realized gain during the year.............. 8,472,742 1,764,380 176,889,538 5,308,138 7,316,705
-------------- -------------- ------------ -------------- ------------
Net change in unrealized appreciation
(depreciation) on translation of assets and
liabilities in foreign currencies............... (7,034) (6,352) (547,070) (86,155) 65,378
Net change in unrealized appreciation
(depreciation) of
investments..................................... 8,880,649 615,083 (53,392,951) 9,582,726 14,910,009
-------------- -------------- ------------ -------------- ------------
Net unrealized appreciation (depreciation)
during the period............................. 8,873,615 608,731 (53,940,021) 9,496,571 14,975,387
-------------- -------------- ------------ -------------- ------------
Net realized and unrealized gain on investments and
foreign currencies................................ 17,346,357 2,373,111 122,949,517 14,804,709 22,292,092
-------------- -------------- ------------ -------------- ------------
Net increase in net assets resulting from
operations........................................ $16,539,412 $2,391,934 $118,440,682 $14,382,722 $21,236,566
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
<CAPTION>
TELECOM-
MUNICATIONS
FUND
------------
<S> <C>
Investment income:
Dividend income (net of foreign withholding tax
of $6,469, $14,755, $180,801, $121,927, $14,864,
and $1,982,953, respectively)................... $ 20,581,055
Interest income.................................. 1,720,560
Other income..................................... --
------------
Total investment income........................ 22,301,615
------------
Expenses:
Investment management and administration fees
(Note 2)........................................ 23,119,601
Amortization of organization costs (Note 1)...... 12,074
Audit fees....................................... 67,129
Custodian Fees (Note 1).......................... 1,025,576
Directors' and Trustees' fees and expenses (Note
2).............................................. 23,176
Fund accounting fees (Note 2).................... 621,480
Insurance expenses............................... --
Legal fees....................................... 24,222
Printing and postage expenses.................... 491,519
Registration and filing fees..................... 102,132
Service and distribution expenses: (Note 2)
Class A........................................ 6,774,499
Class B........................................ 11,294,711
Transfer agent fees (Note 2)..................... 6,517,937
Other expenses................................... 70,269
------------
Total expenses before reductions............... 50,144,325
------------
Expenses reimbursed by Chancellor LGT Asset
Management, Inc. (Note 2)................... --
Expense reductions (Notes 1 & 5)............. (1,344,233)
------------
Total net expenses............................. 48,800,092
------------
Net investment income (loss)....................... (26,498,477)
------------
Net realized and unrealized gain on investments and
foreign currencies: (Note 1)
Net realized gain on investments................. 186,997,632
Net realized gain on foreign currency
transactions.................................... 43,492,161
------------
Net realized gain during the year.............. 230,489,793
------------
Net change in unrealized appreciation
(depreciation) on translation of assets and
liabilities in foreign currencies............... (21,852,465)
Net change in unrealized appreciation
(depreciation) of
investments..................................... (5,766,662)
------------
Net unrealized appreciation (depreciation)
during the period............................. (27,619,127)
------------
Net realized and unrealized gain on investments and
foreign currencies................................ 202,870,666
------------
Net increase in net assets resulting from
operations........................................ $176,372,189
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F29
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
--------------------------------------------------------------
CONSUMER PRODUCTS
AND SERVICES
FUND-CONSOLIDATED
--------------------------------
DECEMBER 30, FINANCIAL SERVICES
1994 FUND-CONSOLIDATED
(COMMENCEMENT ---------------------------
YEAR ENDED OF OPERATIONS) TO YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)...... $ (806,945) $ 1,159 $ 18,823 $ 93,158
Net realized gain (loss) on
investments and foreign currency
transactions..................... 8,472,742 395,974 1,764,380 (438,738)
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies....................... (7,034) 6,921 (6,352) 13,973
Net change in unrealized
appreciation (depreciation) of
investments...................... 8,880,649 382,312 615,083 743,739
------------- ----------------- ------------- ------------
Net increase (decrease) in net
assets resulting from
operations..................... 16,539,412 786,366 2,391,934 412,132
------------- ----------------- ------------- ------------
Class A:
Distributions to shareholders: (Note
1)
From net investment income........ -- -- (56,390) --
From net realized gain on
investments...................... (217,050) -- (8,739) --
Class B:
Distributions to shareholders: (Note
1)
From net investment income........ -- -- (37,999) --
From net realized gain on
investments...................... (180,431) -- (7,991) --
Advisor Class:
Distributions to shareholders: (Note
1)
From net investment income........ -- -- (377) --
From net realized gain on
investments...................... (5,969) -- (43) --
------------- ----------------- ------------- ------------
Total distributions............. (403,450) -- (111,539) --
------------- ----------------- ------------- ------------
Capital share transactions: (Note 4)
Increase from capital shares sold
and reinvested................... 241,650,741 7,649,630 19,900,814 10,643,479
Decrease from capital shares
repurchased...................... (92,740,871) (1,331,021) (15,187,336) (6,199,828)
------------- ----------------- ------------- ------------
Net increase (decrease) from
capital share transactions..... 148,909,870 6,318,609 4,713,478 4,443,651
------------- ----------------- ------------- ------------
Total increase (decrease) in net
assets............................. 165,045,832 7,104,975 6,993,873 4,855,783
Net assets:
Beginning of year................. 7,204,975 100,000 10,265,785 5,410,002
------------- ----------------- ------------- ------------
End of year....................... $ 172,250,807* $ 7,204,975* $ 17,259,658* $ 10,265,785*
------------- ----------------- ------------- ------------
------------- ----------------- ------------- ------------
* Includes undistributed investment
income........................... $ -- $ 397,133 $ -- $ 86,274
------------- ----------------- ------------- ------------
------------- ----------------- ------------- ------------
<CAPTION>
HEALTH CARE
FUND
----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)...... $ (4,508,835) $ (3,529,866)
Net realized gain (loss) on
investments and foreign currency
transactions..................... 176,889,538 67,043,506
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies....................... (547,070) 961,568
Net change in unrealized
appreciation (depreciation) of
investments...................... (53,392,951) 19,234,934
---------------- ----------------
Net increase (decrease) in net
assets resulting from
operations..................... 118,440,682 83,710,142
---------------- ----------------
Class A:
Distributions to shareholders: (Note
1)
From net investment income........ -- --
From net realized gain on
investments...................... (54,405,334) (27,521,553)
Class B:
Distributions to shareholders: (Note
1)
From net investment income........ -- --
From net realized gain on
investments...................... (9,956,648) (2,846,079)
Advisor Class:
Distributions to shareholders: (Note
1)
From net investment income........ -- --
From net realized gain on
investments...................... (69,184) --
---------------- ----------------
Total distributions............. (64,431,166) (30,367,632)
---------------- ----------------
Capital share transactions: (Note 4)
Increase from capital shares sold
and reinvested................... 2,138,295,778 1,635,173,338
Decrease from capital shares
repurchased...................... (2,113,330,083) (1,668,897,114)
---------------- ----------------
Net increase (decrease) from
capital share transactions..... 24,965,695 (33,723,776)
---------------- ----------------
Total increase (decrease) in net
assets............................. 78,975,211 19,618,734
Net assets:
Beginning of year................. 497,659,027 478,040,293
---------------- ----------------
End of year....................... $ 576,634,238* $ 497,659,027*
---------------- ----------------
---------------- ----------------
* Includes undistributed investment
income........................... $ -- $ --
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF CHANGES IN NET ASSETS (cont'd)
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------
INFRASTRUCTURE NATURAL RESOURCES
FUND-CONSOLIDATED FUND-CONSOLIDATED
---------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)...... $ (421,987) $ (507,328) $ (1,055,526) $ 48,118
Net realized gain (loss) on
investments and foreign currency
transactions..................... 5,308,138 (58,363) 7,316,705 (2,391,427)
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies....................... (86,155) 157,236 65,378 (43,764)
Net change in unrealized
appreciation (depreciation) of
investments...................... 9,582,726 (565,235) 14,910,009 177,530
------------- ------------- -------------- -------------
Net increase (decrease) in net
assets resulting from
operations..................... 14,382,722 (973,690) 21,236,566 (2,209,543)
------------- ------------- -------------- -------------
Class A:
Distributions to shareholders: (Note
1)
From net investment income........ -- -- (46,497) (36,529)
From net realized gain on
investments...................... -- -- (9,643) --
Class B:
Distributions to shareholders: (Note
1)
From net investment income........ -- -- -- (30,368)
From net realized gain on
investments...................... -- -- (10,136) --
Advisor Class:
Distributions to shareholders: (Note
1)
From net investment income........ -- -- (853) --
From net realized gain on
investments...................... -- -- (69) --
------------- ------------- -------------- -------------
Total distributions............. -- -- (67,198) (66,897)
------------- ------------- -------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold
and reinvested................... 42,853,853 69,579,771 219,606,793 38,611,615
Decrease from capital shares
repurchased...................... (51,456,466) (36,537,085) (155,468,156) (37,864,366)
------------- ------------- -------------- -------------
Net increase (decrease) from
capital share transactions..... (8,602,613) 33,042,686 64,138,637 747,249
------------- ------------- -------------- -------------
Total increase (decrease) in net
assets............................. 5,780,109 32,068,996 85,308,005 (1,529,191)
Net assets:
Beginning of year................. 86,638,482 54,569,486 26,671,218 28,200,409
------------- ------------- -------------- -------------
End of year....................... $ 92,418,591* $ 86,638,482* $ 111,979,223* $ 26,671,218*
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
* Includes undistributed investment
income........................... $ -- $ 0 $ -- $ 47,438
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
<CAPTION>
TELECOMMUNICATIONS
FUND
----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)...... $ (26,498,477) $ (18,253,687)
Net realized gain (loss) on
investments and foreign currency
transactions..................... 230,489,793 112,281,604
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies....................... (21,852,465) 20,055,808
Net change in unrealized
appreciation (depreciation) of
investments...................... (5,766,662) (203,028,268)
---------------- ----------------
Net increase (decrease) in net
assets resulting from
operations..................... 176,372,189 (88,944,543)
---------------- ----------------
Class A:
Distributions to shareholders: (Note
1)
From net investment income........ -- --
From net realized gain on
investments...................... (64,901,484) (78,594,102)
Class B:
Distributions to shareholders: (Note
1)
From net investment income........ -- --
From net realized gain on
investments...................... (54,643,650) (58,563,435)
Advisor Class:
Distributions to shareholders: (Note
1)
From net investment income........ -- --
From net realized gain on
investments...................... (33,321) --
---------------- ----------------
Total distributions............. (119,578,455) (137,157,537)
---------------- ----------------
Capital share transactions: (Note 4)
Increase from capital shares sold
and reinvested................... 3,156,330,159 1,799,851,047
Decrease from capital shares
repurchased...................... (3,466,020,319) (1,936,308,797)
---------------- ----------------
Net increase (decrease) from
capital share transactions..... (309,690,160) (136,457,750)
---------------- ----------------
Total increase (decrease) in net
assets............................. (252,896,426) (362,559,830)
Net assets:
Beginning of year................. 2,465,923,091 2,828,482,921
---------------- ----------------
End of year....................... $ 2,213,026,665* $ 2,465,923,091*
---------------- ----------------
---------------- ----------------
* Includes undistributed investment
income........................... $ 5,534 $ 0
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F31
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CONSUMER PRODUCTS AND SERVICES FUND
-----------------------------------------------------------------
CLASS A CLASS B
------------------------------- -------------------------------
DECEMBER 30, 1994 DECEMBER 30, 1994
YEAR (COMMENCEMENT YEAR (COMMENCEMENT
ENDED OF OPERATIONS) ENDED OF OPERATIONS)
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1996+++ 1995+++ 1996+++ 1995+++
----------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 14.59 $11.43 $ 14.53 $11.43
----------- -------- ----------- --------
Income from investment operations:
Net investment income (loss)..... (0.22) * 0.02* * (0.31) * (0.04) * *
Net realized and unrealized gain
on investments.................. 7.13 3.14 7.09 3.14
----------- -------- ----------- --------
Net increase from investment
operations.................... 6.91 3.16 6.78 3.10
----------- -------- ----------- --------
Distributions to shareholders:
From net realized gain on
investments..................... (0.52) -- (0.52) --
----------- -------- ----------- --------
Total distributions............ (0.52) -- (0.52) --
----------- -------- ----------- --------
Net asset value, end of period..... $ 20.98 $14.59 $ 20.79 $14.53
----------- -------- ----------- --------
----------- -------- ----------- --------
Total investment return (c)........ 48.82% 27.65% (b) 48.11% 27.12% (b)
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $76,900 $4,082 $87,904 $2,959
Ratio of net investment income to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc. (Notes 1,
2 & 5).......................... (1.14)% 0.20% (a) (1.64)% (0.30)% (a)
Without expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc........... (1.24)% (11.11)% (a) (1.74)% (11.61)% (a)
Ratio of expenses to average net
assets:
With expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc. (Notes 1,
2 & 5).......................... 2.24% 2.32% (a) 2.74% 2.82% (a)
Without expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc........... 2.34% 13.63% (a) 2.84% 14.13% (a)
Portfolio turnover rate++.......... 169% 240% (a) 169% 240% (a)
Average commission rate per share
paid on portfolio
transactions++.................... $0.0545 N/A $0.0545 N/A
<CAPTION>
ADVISOR CLASS+
--------------------------
YEAR JUNE 1, 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996+++ 1995+++
----------- ------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 14.64 $11.84
----------- ------------
Income from investment operations:
Net investment income (loss)..... (0.13) * 0.04* *
Net realized and unrealized gain
on investments.................. 7.16 2.76
----------- ------------
Net increase from investment
operations.................... 7.03 2.80
----------- ------------
Distributions to shareholders:
From net realized gain on
investments..................... (0.52) --
----------- ------------
Total distributions............ (0.52) --
----------- ------------
Net asset value, end of period..... $ 21.15 $14.64
----------- ------------
----------- ------------
Total investment return (c)........ 49.50% 23.65% (b)
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 7,446 $ 164
Ratio of net investment income to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc. (Notes 1,
2 & 5).......................... (0.64)% 0.70% (a)
Without expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc........... (0.74)% (10.61)% (a)
Ratio of expenses to average net
assets:
With expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc. (Notes 1,
2 & 5).......................... 1.74% 1.82% (a)
Without expense reductions and
reimbursement by Chancellor LGT
Asset Management, Inc........... 1.84% 13.13% (a)
Portfolio turnover rate++.......... 169% 240% (a)
Average commission rate per share
paid on portfolio
transactions++.................... $0.0545 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset Management, Inc, net
investment income per share would have been reduced by $0.05 for Class
A, Class B and Advisor Class.
* * Before reimbursement by Chancellor LGT Asset 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.
++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Portfolio as a whole without distinguishing between
the classes of shares issued.
+++ These selected per share operating data were calculated based upon
weighted average shares outstanding during the period.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F32
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
FINANCIAL SERVICES FUND
----------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------- ---------------------------------------
MAY 31, 1994 MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT YEAR ENDED OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS)
----------------------- TO OCTOBER 31, ----------------------- TO OCTOBER 31,
1996+++ 1995+++ 1994 1996+++ 1995+++ 1994
---------- ----------- ---------------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.92 $ 11.62 $ 11.43 $ 11.83 $ 11.60 $ 11.43
---------- ----------- -------- ---------- ----------- --------------
Income from investment operations:
Net investment income (loss).......... 0.05* 0.17* * 0.02 * * (0.01) * 0.11* * 0.00* * *
Net realized and unrealized gain on
investments.......................... 2.36 0.13 0.17 2.34 0.12 0.17
---------- ----------- -------- ---------- ----------- --------------
Net increase from investment
operations......................... 2.41 0.30 0.19 2.33 0.23 0.17
---------- ----------- -------- ---------- ----------- --------------
Distributions to shareholders:
From net investment income............ (0.12) -- -- (0.09) -- --
From net realized gain on
investments.......................... (0.01) -- -- (0.01) -- --
---------- ----------- -------- ---------- ----------- --------------
Total distributions................. (0.13) -- -- (0.10) -- --
---------- ----------- -------- ---------- ----------- --------------
Net asset value, end of period.......... $ 14.20 $ 11.92 $ 11.62 $ 14.06 $ 11.83 $ 11.60
---------- ----------- -------- ---------- ----------- --------------
---------- ----------- -------- ---------- ----------- --------------
Total investment return (c)............. 20.21% 2.58% 1.66 % (b) 19.81% 1.98% 1.49 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,302 $ 5,687 $ 3,175 $ 9,886 $ 4,548 $ 2,235
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2, & 5)... 0.41% 1.46% 0.66 % (a) (0.09)% 0.96% 0.16 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.66)% (5.34)% (7.26)% (a) (1.16)% (5.84)% (7.76)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2, & 5)... 2.32% 2.34% 2.40 % (a) 2.82% 2.84% 2.90 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.39% 9.14% 10.32 % (a) 3.89% 9.64% 10.82 %(a)
Portfolio turnover rate++............... 103% 170% 53 % (a) 103% 170% 53 %(a)
Average commission rate per share paid
on portfolio transactions++............ $ 0.0080 N/A N/A $ 0.0080 N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.13 for each
of the three classes.
* * Before reimbursement by Chancellor LGT Asset 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.23 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Portfolio 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.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F33
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
FINANCIAL SERVICES FUND
--------------------------
ADVISOR CLASS+
--------------------------
YEAR JUNE 1, 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996+++ 1995
----------- -------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.95 $ 11.09
----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.12* 0.09* *
Net realized and unrealized gain on
investments.......................... 2.36 0.77
----------- -------------
Net increase from investment
operations......................... 2.48 0.86
----------- -------------
Distributions to shareholders:
From net investment income............ (0.16) --
From net realized gain on
investments.......................... (0.01) --
----------- -------------
Total distributions................. (0.17) --
----------- -------------
Net asset value, end of period.......... $ 14.26 $ 11.95
----------- -------------
----------- -------------
Total investment return (c)............. 20.87% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 72 $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2, & 5)... 0.91% 1.96%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.16)% (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2, & 5)... 1.82% 1.84%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.89% 8.64%(a)
Portfolio turnover rate++............... 103% 170%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0080 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.13 for each
of the three classes.
* * Before reimbursement by Chancellor LGT Asset 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.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.23 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Portfolio 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.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F34
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
HEALTH CARE FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 (D) 1995 1994 (D) 1993 (D) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.17) (0.15) (0.22) (0.15) (0.18)
Net realized and unrealized gain
(loss) on investments................ 4.79 3.73 2.02 0.57 (1.53)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 4.62 3.58 1.80 0.42 (1.71)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (2.86) (1.34) -- -- (0.14)
In excess of net realized gain on
investments.......................... -- -- (0.06) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.86) (1.34) (0.06) -- (0.14)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 23.60 $ 21.84 $ 19.60 $ 17.86 $ 17.44
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 23.14% 19.79% 10.11% 2.4% (8.9)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 467,861 $ 426,380 $ 438,940 $ 461,113 $ 655,867
Ratio of net investment income (loss) to
average net assets..................... (0.71)% (0.72)% (1.23)% (0.9)% (0.97)%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.80% 1.85% 1.98% 2.0% 2.05%
Without expense reductions............ 1.84% 1.91% --%* --%* --%*
Portfolio turnover rate++++............. 157% 99% 64% 61% 30%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0548 N/A N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
+ 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 rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F35
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
HEALTH CARE FUND
-----------------------------------------------------------------------------
CLASS B++ ADVISOR CLASS+++
------------------------------------------------- --------------------------
APRIL 1, 1993 YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO ENDED TO
---------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (D) 1995 (D) 1994 (D) 1993 (D) 1996 (D) 1995
---------- ---------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.56 $ 19.46 $ 17.80 $ 15.59 $ 21.88 $ 18.66
---------- ---------- ---------- ------------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... (0.27) (0.25) (0.32) (0.14) (0.05) (0.02)
Net realized and unrealized gain
(loss) on investments................ 4.72 3.69 2.02 2.35 4.80 3.24
---------- ---------- ---------- ------------- ----------- -------------
Net increase (decrease) from
investment operations.............. 4.45 3.44 1.70 2.21 4.75 3.22
---------- ---------- ---------- ------------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (2.86) (1.34) -- -- (2.86) --
In excess of net realized gain on
investments.......................... -- -- (0.04) -- -- --
---------- ---------- ---------- ------------- ----------- -------------
Total distributions................. (2.86) (1.34) (0.04) -- (2.86) --
---------- ---------- ---------- ------------- ----------- -------------
Net asset value, end of period.......... $ 23.15 $ 21.56 $ 19.46 $ 17.80 $ 23.77 $ 21.88
---------- ---------- ---------- ------------- ----------- -------------
---------- ---------- ---------- ------------- ----------- -------------
Total investment return (c)............. 22.59% 19.17% 9.55% 14.2%(a) 23.82% 17.10%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 107,622 $ 70,740 $ 39,100 $ 8,604 $ 1,152 $ 539
Ratio of net investment income (loss) to
average net assets..................... (1.21)% (1.22)% (1.73)% (1.4)%(b) (0.21)% (0.22)%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.30% 2.35% 2.48% 2.5%(b) 1.30% 1.35%(a)
Without expense reductions............ 2.34% 2.41% --%* --%* 1.34% 1.41%(a)
Portfolio turnover rate++++............. 157% 99% 64% 61% 157% 99%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0548 N/A N/A N/A $ 0.0548 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does include sales charge.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratios of expenses to average net assets" was made
without considering the effect of expense reduction, if any.
+ 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 rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F36
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
INFRASTRUCTURE FUND
------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------- -----------------------------------------
YEAR ENDED OCTOBER 31, MAY 31, 1994 YEAR ENDED OCTOBER 31, MAY 31, 1994
(COMMENCEMENT OF (COMMENCEMENT OF
---------------------- OPERATIONS) TO ---------------------- OPERATIONS) TO
1996+++ 1995 OCTOBER 31, 1994 1996+++ 1995 OCTOBER 31, 1994
---------- ---------- ----------------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.11 $ 12.47 $ 11.43 $ 12.03 $ 12.45 $ 11.43
---------- ---------- ----------------- ---------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.03) * 0.01* * (0.09) (0.09) * (0.01) * *
Net realized and unrealized gain
(loss) on investments................ 2.34 (0.33) 1.03 2.30 (0.33) 1.03
---------- ---------- ----------------- ---------- ---------- -----------------
Net increase (decrease) from
investment operations.............. 2.31 (0.36) 1.04 2.21 (0.42) 1.02
---------- ---------- ----------------- ---------- ---------- -----------------
Net asset value, end of period.......... $ 14.42 $ 12.11 $ 12.47 $ 14.24 $ 12.03 $ 12.45
---------- ---------- ----------------- ---------- ---------- -----------------
---------- ---------- ----------------- ---------- ---------- -----------------
Total investment return (c)............. 19.08% (2.89)% 9.10% (b) 18.37% (3.37)% 8.92% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 38,397 $ 36,241 $ 23,615 $ 53,678 $ 50,181 $ 30,954
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc. (Notes 1 & 5)........ (0.19)% (0.32)% 0.41% (a) (0.69)% (0.82)% (0.09)% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc....................... (0.30)% (0.58)% (0.47)% (a) (0.80)% (1.08)% (0.97)% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc. (Notes 1 & 5)........ 2.14% 2.36% 2.40% (a) 2.64% 2.86% 2.90% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc....................... 2.25% 2.62% 3.28% (a) 2.75% 3.12% 3.78% (a)
Portfolio turnover rate++............... 41% 45% 18% 41% 45% 18%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0109 N/A N/A $ 0.0109 N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset 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.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.02 for Class
A and Class B shares from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
+++ These selected per share operating data were calculated based upon
average shares outstanding during the period.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F37
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
INFRASTRUCTURE FUND
--------------------------
ADVISOR CLASS+
--------------------------
YEAR JUNE 1, 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996+++ 1995
----------- -------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.14 $ 12.00
----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.04 0.02*
Net realized and unrealized gain
(loss) on investments................ 2.34 0.12
----------- -------------
Net increase (decrease) from
investment operations.............. 2.38 0.14
----------- -------------
Net asset value, end of period.......... $ 14.52 $ 12.14
----------- -------------
----------- -------------
Total investment return (c)............. 19.60% 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 344 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc. (Notes 1 & 5)........ 0.31% 0.18%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc....................... 0.20% (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc. (Notes 1 & 5)........ 1.64% 1.86%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management Inc....................... 1.75% 2.12%(a)
Portfolio turnover rate++............... 41% 45%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0109 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset 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.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.02 for Class
A and Class B shares from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
+++ These selected per share operating data were calculated based upon
average shares outstanding during the period.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
NATURAL RESOURCES FUND
--------------------------------------------------------------------------------
CLASS A CLASS B
--------------------------------------- ---------------------------------------
MAY 31, 1994 MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT YEAR ENDED OCTOBER 31, (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS)
---------------------- TO OCTOBER 31, ---------------------- TO OCTOBER 31,
1996+++ 1995 1994 1996+++ 1995 1994
---------- ---------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.44 $ 12.41 $ 11.43 $ 11.36 $ 12.38 $ 11.43
---------- ---------- --------------- ---------- ---------- ---------------
Income from investment operations:
Net investment income (loss).......... (0.24) 0.04* 0.06* * (0.31) (0.02) * 0.03* *
Net realized and unrealized gain
(loss) on investments................ 6.28 (0.98) 0.92 6.25 (0.98) 0.92
---------- ---------- --------------- ---------- ---------- ---------------
Net increase (decrease) from
investment operations.............. 6.04 (0.94) 0.98 5.94 (1.00) 0.95
---------- ---------- --------------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ (0.04) (0.03) -- -- (0.02) --
From net realized gain on
investments.......................... (0.01) -- -- (0.01) -- --
---------- ---------- --------------- ---------- ---------- ---------------
Total distributions................. (0.05) (0.03) -- (0.01) (0.02) --
---------- ---------- --------------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 17.43 $ 11.44 $ 12.41 $ 17.29 $ 11.36 $ 12.38
---------- ---------- --------------- ---------- ---------- ---------------
---------- ---------- --------------- ---------- ---------- ---------------
Total investment return (c)............. 53.04% (7.58)% 8.57% (b) 52.39% (8.05)% 8.31% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 48,729 $ 12,598 $ 14,797 $ 57,749 $ 13,978 $ 13,404
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 2 & 5)....... (1.55)% 0.41% 2.63% (a) (2.05)% (0.09)% 2.13% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (0.69)% 0.65% (a) (2.15)% (1.19)% 0.15% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 2 & 5)....... 2.20% 2.37% 2.40% (a) 2.70% 2.87% 2.90% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.30% 3.47% 4.38% (a) 2.80% 3.97% 4.88% (a)
Portfolio turnover rate++............... 94% 87% 137% 94% 87% 137%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0243 N/A N/A $ 0.0243 N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income (loss) per share would have been reduced (increased)
by $0.14, $0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.04 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Portfolio as a whole without distinguishing between
the classes of shares issued.
+++ These selected per share operating data were calculated based upon
average shares outstanding during the period.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F39
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
NATURAL RESOURCES FUND
--------------------------
ADVISOR CLASS+
--------------------------
YEAR JUNE 1, 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996+++ 1995
----------- -------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.47 $ 11.45
----------- -------------
Income from investment operations:
Net investment income (loss).......... (0.17) 0.11*
Net realized and unrealized gain
(loss) on investments................ 6.28 (0.09)
----------- -------------
Net increase (decrease) from
investment operations.............. 6.11 0.02
----------- -------------
Distributions to shareholders:
From net investment income............ (0.10) --
From net realized gain on
investments.......................... (0.01) --
----------- -------------
Total distributions................. (0.11) --
----------- -------------
Net asset value, end of period.......... $ 17.47 $ 11.47
----------- -------------
----------- -------------
Total investment return (c)............. 53.76% 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,502 $ 95
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 2 & 5)....... (1.05)% 0.91%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.15)% (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 2 & 5)....... 1.70% 1.87%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 1.80% 2.97%(a)
Portfolio turnover rate++............... 94% 87%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0243 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income (loss) per share would have been reduced (increased)
by $0.14, $0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.04 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Portfolio as a whole without distinguishing between
the classes of shares issued.
+++ These selected per share operating data were calculated based upon
average shares outstanding during the period.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
TELECOMMUNICATIONS FUND
--------------------------------------------------------------
CLASS A+
--------------------------------------------------------------
JANUARY 27,
1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
---------------------------------------------- TO OCTOBER 31,
1996 (D) 1995 1994 (D) 1993 1992
---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.42 $ 17.80 $ 16.92 $ 11.16 $ 11.43
---------- ---------- ---------- ---------- --------------
Income from investment operations:
Net investment income (loss).......... (0.13) (0.09) (0.01) 0.08 0.14*
Net realized and unrealized gain
(loss) on investments................ 1.22 (0.43) 1.17 5.83 (0.41)
---------- ---------- ---------- ---------- --------------
Net increase (decrease) from
investment operations.............. 1.09 (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.......................... (0.82) (0.86) (0.27) -- --
---------- ---------- ---------- ---------- --------------
Total distributions................. (0.82) (0.86) (0.28) (0.15) --
---------- ---------- ---------- ---------- --------------
Net asset value, end of period.......... $ 16.69 $ 16.42 $ 17.80 $ 16.92 $ 11.16
---------- ---------- ---------- ---------- --------------
---------- ---------- ---------- ---------- --------------
Total investment return (c)............. 7.00% (2.88)% 7.02% 53.6% (2.4)%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,204,428 $1,353,722 $1,644,402 $1,223,340 $ 442,862
Ratio of net investment income (loss) to
average net assets..................... (0.84)% (0.49)% (0.02)% 0.8% 2.1 %(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 7)....... 1.74% 1.77% 1.80% 2.0% 2.3 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 1.79% 1.83% --%** --%** -- %**
Portfolio turnover rate++++............. 37% 62% 57% 41% 4 %(a)
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0165 N/A N/A N/A N/A
</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 and average commission rates are calculated on the
basis of the Fund as whole without distinguishing between the classes
of shares issued.
* Includes reimbursements by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of less than $0.01. Without such
reimbursement, the annualized expense ratio would have been 2.30% and
the annualized ratio of net investment income to average net assets
would have been 2.04% (See Note 2).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charge.
(d) These per share operating performance data were calculated based upon
the weighted average shares outstanding during the year.
The accompanying notes are an integral part of the financial statements.
F41
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
TELECOMMUNICATIONS FUND
---------------------------------------------------------------------------
CLASS B++
----------------------------------------------- ADVISOR CLASS+++
APRIL 1, --------------------------
1993 YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO ENDED TO
---------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (D) 1995 1994 (D) 1993 1996 (D) 1995
---------- ---------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.20 $ 17.66 $ 16.87 $ 12.68 $ 16.46 $ 15.24
---------- ---------- ---------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... (0.23) (0.17) (0.10) 0.01 (0.05) --
Net realized and unrealized gain
(loss) on investments................ 1.22 (0.43) 1.17 4.18 1.22 1.22
---------- ---------- ---------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. 0.99 (0.60) 1.07 4.19 1.17 1.22
---------- ---------- ---------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.01) -- -- --
From net realized gain on
investments.......................... (0.82) (0.86) (0.27) -- (0.82) --
---------- ---------- ---------- ----------- ----------- -------------
Total distributions................. (0.82) (0.86) (0.28) -- (0.82) --
---------- ---------- ---------- ----------- ----------- -------------
Net asset value, end of period.......... $ 16.37 $ 16.20 $ 17.66 $ 16.87 $ 16.81 $ 16.46
---------- ---------- ---------- ----------- ----------- -------------
---------- ---------- ---------- ----------- ----------- -------------
Total investment return (c)............. 6.46% (3.37)% 6.50% 33.0%(b) 7.49% 7.94%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $1,007,654 $1,111,520 $1,184,081 $ 455,335 $ 945 $ 681
Ratio of net investment income (loss) to
average net assets..................... (1.34)% (0.99)% (0.52)% 0.3%(a) (0.34)% 0.01%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 7)....... 2.24% 2.27% 2.30% 2.5%(a) 1.24% 1.27%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.29% 2.33% --%** --%** 1.29% 1.33%(a)
Portfolio turnover rate++++............. 37% 62% 57% 41% 37% 62%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0165 N/A N/A N/A $ 0.0165 N/A
</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 and average commission rates are calculated on the
basis of the Fund as whole without distinguishing between the classes
of shares issued.
* Includes reimbursements by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of less than $0.01. Without such
reimbursement, the annualized expense ratio would have been 2.30% and
the annualized ratio of net investment income to average net assets
would have been 2.04% (See Note 2).
** Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charge.
(d) These per share operating performance data were calculated based upon
the weighted average shares outstanding during the year.
The accompanying notes are an integral part of the financial statements.
F42
<PAGE>
GT GLOBAL THEME FUNDS
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Consumer Products and Services Fund, GT Global Financial Services
Fund, GT Global Health Care Fund, GT Global Infrastructure Fund, GT Global
Natural Resources Fund, and GT Global Telecommunications Fund ("Funds") are
separate series of G.T. Investment Funds, Inc. ("Company"). Collectively, these
Funds are known as the "GT Global Theme Funds." The Company is organized as a
Maryland corporation and is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company. The
Company has a total of twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The GT Global Consumer Products and Services Fund, GT Global Financial Services
Fund, GT Global Infrastructure Fund, and GT Global Natural Resources Fund each
invests substantially all of its investable assets in Global Consumer Products
and Services Portfolio, Global Financial Services Portfolio, Global
Infrastructure Portfolio, and Global Natural Resources Portfolio ("Portfolios"),
respectively. Each of these Portfolios is organized as a New York Trust and is
registered under the 1940 Act as a diversified, open-end management investment
company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the aforementioned Funds and their respective Portfolios
have been presented on a consolidated basis, and represent all activities of
both the respective Funds and Portfolios. Through October 31, 1996, all of the
shares of beneficial interest of each Portfolio were owned by either its
respective fund or Chancellor LGT Asset Management, Inc. (the "Manager"), which
has a nominal ($100) investment in each Portfolio.
The Funds offer 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. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of each 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 Funds and Portfolios in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete 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 the Manager 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 the
Manager 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 or 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 Company's Board of Directors or
the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of each Fund and 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 Funds or
Portfolios (the phrase "Fund or Portfolio" hereinafter includes the GT Global
Health Care Fund, the GT Global Telecommunications Fund, and each of the four
Portfolios) 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.
A Fund or 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.
F43
<PAGE>
GT GLOBAL THEME FUNDS
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 a
Fund's or 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 a Fund or Portfolio, it is
the Fund's or 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
Fund or 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 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 a Fund or Portfolio as an unrealized gain or loss.
When the Forward Contract is closed, the Fund or 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 Fund's or Portfolio's "Statement of Assets
and Liabilities". A Fund or 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. A Fund or 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 a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or 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, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or 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 Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid 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 or 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 Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or 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 Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or 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 Fund or 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 Fund or 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 Fund or 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 Fund or 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 Fund or 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 a
Fund or Portfolio 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 or 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 Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or 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 Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. A Fund or
F44
<PAGE>
GT GLOBAL THEME FUNDS
Portfolio may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. A Fund or 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 Fund
or Portfolio to subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1996, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the Funds or
Portfolios:
<TABLE>
<CAPTION>
OCTOBER 31, 1996
--------------------------------------
AGGREGATE VALUE ON
LOAN CASH COLLATERAL
------------------- -----------------
<S> <C> <C>
Global Consumer Products and Services Portfolio................................. $ 10,331,341 $ 10,659,295
Global Financial Services Portfolio............................................. 750,391 805,810
GT Global Health Care Fund...................................................... 20,556,418 21,329,702
Global Infrastructure Portfolio................................................. 6,788,616 7,455,555
Global Natural Resources Portfolio.............................................. 3,663,443 3,777,600
GT Global Telecommunications Fund............................................... 214,505,953 222,733,129
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
--------------------
FEES RECEIVED
--------------------
<S> <C>
Global Consumer Products and Services Portfolio................................. $ 44,553
Global Financial Services Portfolio............................................. 1,304
GT Global Health Care Fund...................................................... 86,339
Global Infrastructure Portfolio................................................. 88,349
Global Natural Resources Portfolio.............................................. 16,439
GT Global Telecommunications Fund............................................... 944,549
</TABLE>
For international securities, cash collateral is received by a Fund or 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 a Fund or 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.
Fees received from securities loaned were used to reduce the Funds' or
Portfolios' custodian fees.
(I) TAXES
It is the intended policy of the Funds and Portfolios 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 Funds 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 each 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 Funds or Portfolios and timing
differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global Consumer Products and Services Fund, GT
Global Financial Services Fund, GT Global Infrastructure Fund, GT Global Natural
Resources Fund, and GT Global Telecommunications Fund in connection with their
organizations, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of its shares
aggregated $51,500, $63,100, $51,500, $51,500 and $88,750, respectively. 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 or 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, each Fund or Portfolio may focus its investments in certain related
consumer products and services, financial services, health care, infrastructure,
natural resources, or telecommunications industries, subjecting the Fund or
Portfolio to greater risk than a fund that is more diversified.
(M) INDEXED SECURITIES
A Fund or 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.
F45
<PAGE>
GT GLOBAL THEME FUNDS
(N) RESTRICTED SECURITIES
A Fund or 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. At the end of the period,
restricted securities (excluding 144A issues) are shown at the end of the Fund's
or Portfolio's Portfolio of Investments.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc., is the Funds' and Portfolios' investment
manager and administrator. On October 31, 1996, Chancellor Capital Management,
Inc. merged with LGT Asset Management, Inc., and the surviving entity was
renamed Chancellor LGT Asset Management, Inc. GT Global Consumer Products and
Services Fund, GT Global Financial Services Fund, GT Global Infrastructure Fund,
and GT Global Natural Resources Fund each pays the Manager administration fees
at the annualized rate of 0.25% of such Fund's average daily net assets. Each of
the Portfolios pays investment management and administration fees to the Manager
at the annualized rate of 0.725% on the first $500 million of the 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. GT Global Health Care Fund and GT
Global Telecommunications Fund each pays investment management and
administration fees to the Manager 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 a 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.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer 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 Funds' current
prospectus. GT 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, 1996, GT Global retained the
following sales charges: $115,133 for the GT Global Consumer Products and
Services Fund, $4,721 for the GT Global Financial Services Fund, $90,926 for the
GT Global Health Care Fund, $19,811 for the GT Global Infrastructure Fund,
$49,532 for the GT Global Natural Resources Fund, and $231,226 for the GT Global
Telecommunications Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Funds' current prospectus. GT Global collected CDSCs for the
year ended October 31, 1996, as follows: $0 for the GT Global Consumer Products
and Services Fund, $1,470 for the GT Global Financial Services Fund, $5,017 for
the GT Global Health Care Fund, $4,529 for the GT Global Infrastructure Fund,
$3,537 for the GT Global Natural Resources Fund, and $18,969 for the GT Global
Telecommunications Fund. GT 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, GT 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 Funds' current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of: $45,035 for the GT Global Consumer Products and Services Fund,
$23,553 for the GT Global Financial Services Fund, $286,785 for the GT Global
Health Care Fund, $239,035 for the GT Global Infrastructure Fund, $90,557 for
the GT Global Natural Resources Fund, and $5,617,501 for the GT Global
Telecommunications Fund. In addition, GT 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 Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, a Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.50% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global is reimbursed under the Class A Plan will have
been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for GT 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.
The Manager and GT Global voluntarily have undertaken to limit each 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 the
Manager of
F46
<PAGE>
GT GLOBAL THEME FUNDS
investment management and administration fees, waivers by GT Global of payments
under the Class A Plan and/or Class B Plan and/or reimbursements by the Manager
or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services 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. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund or Portfolio'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 the Manager and 0.02% to the assets in excess of $5
billion and allocating the result according to each Fund's average daily net
assets.
The Company pays each of its Directors who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Director.
Each Portfolio pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $500 per year plus $150 for
each meeting of the board or any committee thereof attended by the Trustees.
At October 31, 1996, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by each Fund or Portfolio for the year ended
October 31, 1996:
PURCHASES AND SALES OF SECURITIES
<TABLE>
<CAPTION>
PURCHASES
------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- ------------
<S> <C> <C>
Global Consumer Products and Services Portfolio................................. $ -- $239,257,063
Global Financial Services Portfolio............................................. -- 17,579,805
GT Global Health Care Fund...................................................... -- 839,344,279
Global Infrastructure Portfolio................................................. -- 34,122,375
Global Natural Resources Portfolio.............................................. -- 161,696,208
GT Global Telecommunications Fund............................................... -- 891,464,656
</TABLE>
<TABLE>
<CAPTION>
SALES
--------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- --------------
<S> <C> <C>
Global Consumer Products and Services Portfolio................................. $ -- $ 96,407,016
Global Financial Services Portfolio............................................. -- 13,303,919
GT Global Health Care Fund...................................................... -- 931,408,323
Global Infrastructure Portfolio................................................. -- 45,967,339
Global Natural Resources Portfolio.............................................. -- 102,403,195
GT Global Telecommunications Fund............................................... -- 1,310,205,434
</TABLE>
4. CAPITAL SHARES
At October 31, 1996, 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 GT Global Telecommunications Fund; 400,000,000 were
classified as shares of GT Global Government Income Fund; 200,000,000 were
classified as shares of GT Global Health Care Fund; 200,000,000 were classified
as shares of GT Global Strategic Income Fund; 200,000,000 were classified as
shares of GT Global Currency Fund (inactive); 200,000,000 were classified as
shares of GT Global Growth & Income Fund; 200,000,000 were classified as shares
of GT Global Small Companies Fund (inactive); 200,000,000 were classified as
shares of GT Global Latin America Growth Fund; 200,000,000 were classified as
shares of GT Global Emerging Markets Fund; 200,000,000 were classified as shares
of GT Global High Income Fund; 200,000,000 were classified as shares of GT
Global Financial Services Fund; 200,000,000 were classified as shares of GT
Global Natural Resources Fund; 200,000,000 were classified as shares of GT
Global Infrastructure Fund; and 200,000,000 were classified as shares of GT
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 Funds were as
follows:
F47
<PAGE>
GT GLOBAL THEME FUNDS
CAPITAL SHARE TRANSACTIONS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
--------------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ----------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold....................................... 6,142,401 $ 118,779,939 330,327 $ 4,257,766
Shares issued in connection with reinvestment of
distributions................................... 13,656 202,166 -- --
------------- ----------------- ------------ --------------
6,156,057 118,982,105 330,327 4,257,766
Shares repurchased................................ (2,769,898) (54,486,898) (54,980) (746,671)
------------- ----------------- ------------ --------------
Net increase...................................... 3,386,159 $ 64,495,207 275,347 $ 3,511,095
------------- ----------------- ------------ --------------
------------- ----------------- ------------ --------------
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
--------------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ----------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold....................................... 5,689,956 $ 110,105,123 246,365 $ 3,239,565
Shares issued in connection with reinvestment of
distributions................................... 10,957 161,052 -- --
------------- ----------------- ------------ --------------
5,700,913 110,266,175 246,365 3,239,565
Shares repurchased................................ (1,675,446) (32,960,366) (47,105) (579,906)
------------- ----------------- ------------ --------------
Net increase...................................... 4,025,467 $ 77,305,809 199,260 $ 2,659,659
------------- ----------------- ------------ --------------
------------- ----------------- ------------ --------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
YEAR ENDED SALE OF SHARES)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
--------------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ----------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold....................................... 589,226 $ 12,396,492 11,525 $ 152,299
Shares issued in connection with reinvestment of
distributions................................... 402 5,969 -- --
------------- ----------------- ------------ --------------
589,628 12,402,461 11,525 152,299
Shares repurchased................................ (248,775) (5,293,607) (331) (4,444)
------------- ----------------- ------------ --------------
Net increase...................................... 340,853 $ 7,108,854 11,194 $ 147,855
------------- ----------------- ------------ --------------
------------- ----------------- ------------ --------------
</TABLE>
F48
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- --------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold....................................... 900,372 $ 11,973,497 669,827 $ 7,432,400
Shares issued in connection with reinvestment of
distributions................................... 3,997 50,562 -- --
--------- ------------ -------- -----------
904,369 12,024,059 669,827 7,432,400
Shares repurchased................................ (867,261) (11,494,650) (465,993) (5,162,753)
--------- ------------ -------- -----------
Net increase...................................... 37,108 $ 529,409 203,834 $ 2,269,647
--------- ------------ -------- -----------
--------- ------------ -------- -----------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- --------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold....................................... 596,980 $ 7,792,181 286,019 $ 3,181,342
Shares issued in connection with reinvestment of
distributions................................... 2,898 36,456 -- --
--------- ------------ -------- -----------
599,878 7,828,637 286,019 3,181,342
Shares repurchased................................ (281,339) (3,677,982) (94,377) (1,037,075)
--------- ------------ -------- -----------
Net increase...................................... 318,539 $ 4,150,655 191,642 $ 2,144,267
--------- ------------ -------- -----------
--------- ------------ -------- -----------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
YEAR ENDED SALE OF SHARES)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
----------------------- -------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- --------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold....................................... 3,500 $ 47,698 2,599 $ 29,737
Shares issued in connection with reinvestment of
distributions................................... 35 420 -- --
--------- ------------ -------- -----------
3,535 48,118 2,599 29,737
Shares repurchased................................ (1,103) (14,704) -- --
--------- ------------ -------- -----------
Net increase...................................... 2,432 $ 33,414 2,599 $ 29,737
--------- ------------ -------- -----------
--------- ------------ -------- -----------
</TABLE>
F49
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 84,410,204 $1,903,687,570 78,194,828 $ 1,518,869,435
Shares issued in connection with reinvestment of
distributions................................... 2,009,491 41,475,881 1,197,686 21,103,166
----------- ------------- ----------- ---------------
86,419,695 1,945,163,451 79,392,514 1,539,972,601
Shares repurchased................................ (86,124,175) (1,957,478,015) (82,265,383) (1,598,688,749)
----------- ------------- ----------- ---------------
Net increase (decrease)........................... 295,520 $ (12,314,564) (2,872,869) $ (58,716,148)
----------- ------------- ----------- ---------------
----------- ------------- ----------- ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 6,741,207 $ 157,453,975 4,710,190 $ 92,123,273
Shares issued in connection with reinvestment of
distributions................................... 411,416 8,363,880 140,259 2,451,761
----------- ------------- ----------- ---------------
7,152,623 165,817,855 4,850,449 94,575,034
Shares repurchased................................ (5,784,194) (129,761,569) (3,578,957) (70,045,915)
----------- ------------- ----------- ---------------
Net increase...................................... 1,368,429 $ 36,056,286 1,271,492 $ 24,529,119
----------- ------------- ----------- ---------------
----------- ------------- ----------- ---------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
YEAR ENDED SALE OF SHARES)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
--------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 1,142,479 $ 27,246,793 32,235 $ 625,703
Shares issued in connection with reinvestment of
distributions................................... 3,280 67,679 -- --
----------- ------------- ----------- ---------------
1,145,759 27,314,472 32,235 625,703
Shares repurchased................................ (1,121,971) (26,090,499) (7,577) (162,450)
----------- ------------- ----------- ---------------
Net increase...................................... 23,788 $ 1,223,973 24,658 $ 463,253
----------- ------------- ----------- ---------------
----------- ------------- ----------- ---------------
</TABLE>
F50
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------------------- -------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold....................................... 2,175,475 $ 30,275,819 2,997,022 $ 35,715,669
Shares repurchased................................ (2,503,715) (33,964,432) (1,898,557) (23,075,894)
------------- ---------------- ------------- ----------------
Net increase (decrease)........................... (328,240) $ (3,688,613) 1,098,465 $ 12,639,775
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------------------- -------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold....................................... 903,064 $ 12,423,925 2,815,712 $ 33,606,616
Shares repurchased................................ (1,306,101) (17,421,173) (1,130,463) (13,421,180)
------------- ---------------- ------------- ----------------
Net increase (decrease)........................... (403,037) $ (4,997,248) 1,685,249 $ 20,185,436
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
YEAR ENDED SALE OF SHARES)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
------------------------------- -------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold....................................... 11,122 $ 154,109 21,018 $ 257,486
Shares repurchased................................ (5,256) (70,861) (3,199) (40,011)
------------- ---------------- ------------- ----------------
Net increase...................................... 5,866 $ 83,248 17,819 $ 217,475
------------- ---------------- ------------- ----------------
------------- ---------------- ------------- ----------------
</TABLE>
F51
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------------- -------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold....................................... 9,220,103 $ 142,385,816 2,262,790 $ 25,998,648
Shares issued in connection with reinvestment of
distributions................................... 3,977 47,892 2,665 30,350
------------- ------------------ ------------- ----------------
9,224,080 142,433,708 2,265,455 26,028,998
Shares repurchased................................ (7,529,884) (116,812,100) (2,356,872) (27,189,124)
------------- ------------------ ------------- ----------------
Net increase (decrease)........................... 1,694,196 $ 25,621,608 (91,417) $ (1,160,126)
------------- ------------------ ------------- ----------------
------------- ------------------ ------------- ----------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------------- -------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold....................................... 4,288,540 $ 66,460,658 1,073,588 $ 12,447,266
Shares issued in connection with reinvestment of
distributions................................... 709 8,495 2,190 24,898
------------- ------------------ ------------- ----------------
4,289,249 66,469,153 1,075,778 12,472,164
Shares repurchased................................ (2,178,862) (33,276,553) (928,373) (10,660,475)
------------- ------------------ ------------- ----------------
Net increase...................................... 2,110,387 $ 33,192,600 147,405 $ 1,811,689
------------- ------------------ ------------- ----------------
------------- ------------------ ------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
YEAR ENDED SALE OF SHARES)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
--------------------------------- -------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------- ------------------ ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold....................................... 663,037 $ 10,703,010 9,525 $ 110,453
Shares issued in connection with reinvestment of
distributions................................... 77 922 -- --
------------- ------------------ ------------- ----------------
663,114 10,703,932 9,525 110,453
Shares repurchased................................ (356,384) (5,379,503) (1,258) (14,767)
------------- ------------------ ------------- ----------------
Net increase...................................... 306,730 $ 5,324,429 8,267 $ 95,686
------------- ------------------ ------------- ----------------
------------- ------------------ ------------- ----------------
</TABLE>
F52
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------- ----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 161,134,594 $ 2,777,197,821 83,031,164 $ 1,357,464,500
Shares issued in connection with reinvestment of
distributions................................... 3,376,395 52,886,360 3,938,085 63,284,987
------------ --------------- ----------- ---------------
164,510,989 2,830,084,181 86,969,249 1,420,749,487
Shares repurchased................................ (174,818,005) (3,017,740,549) (96,901,218) (1,584,327,366)
------------ --------------- ----------- ---------------
Net decrease...................................... (10,307,016) $ (187,656,368) (9,931,969) $ (163,577,879)
------------ --------------- ----------- ---------------
------------ --------------- ----------- ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------- ----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 15,365,874 $ 260,167,785 20,348,248 $ 330,809,778
Shares issued in connection with reinvestment of
distributions................................... 2,882,770 44,452,585 2,988,078 47,599,706
------------ --------------- ----------- ---------------
18,248,644 304,620,370 23,336,326 378,409,484
Shares repurchased................................ (25,319,583) (426,829,324) (21,776,751) (351,935,028)
------------ --------------- ----------- ---------------
Net increase (decrease)........................... (7,070,939) $ (122,208,954) 1,559,575 $ 26,474,456
------------ --------------- ----------- ---------------
------------ --------------- ----------- ---------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
YEAR ENDED SALE OF SHARES)
OCTOBER 31, 1996 TO OCTOBER 31, 1995
----------------------------- ----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 1,229,487 $ 21,592,338 44,033 $ 692,076
Shares issued in connection with reinvestment of
distributions................................... 2,119 33,270 -- --
------------ --------------- ----------- ---------------
1,231,606 21,625,608 44,033 692,076
Shares repurchased................................ (1,216,785) (21,450,446) (2,662) (46,403)
------------ --------------- ----------- ---------------
Net increase...................................... 14,821 $ 175,162 41,371 $ 645,673
------------ --------------- ----------- ---------------
------------ --------------- ----------- ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended October 31, 1996, the
Funds' or Portfolios' expenses were reduced by the following amounts under these
arrangements:
<TABLE>
<CAPTION>
EXPENSE
REDUCTION
---------
<S> <C>
Global Consumer Products and Services Portfolio.......................................................................... $ 17,893
Global Financial Services Portfolio...................................................................................... 9,402
GT Global Health Care Fund............................................................................................... 130,688
Global Infrastructure Portfolio.......................................................................................... 10,217
Global Natural Resources Portfolio....................................................................................... 45,253
GT Global Telecommunications Fund........................................................................................ 399,684
</TABLE>
F53
<PAGE>
GT GLOBAL THEME FUNDS
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940 as an affiliated
company. Investments in affiliated companies by GT Global Health Care Fund and
GT Global Telecommunications Fund at October 31, 1996 amounted to $91,854,438
and $180,037,891, respectively, at value.
Transactions with affiliated companies are as follows:
GT GLOBAL HEALTH CARE FUND:
<TABLE>
<CAPTION>
NET REALIZED
PURCHASES COST SALES COST GAIN (LOSS) DIVIDEND INCOME
--------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C>
AVECOR Cardiovascular, Inc........................ $ 6,330,675 $ -- $ -- $ --
Cardiometrics, Inc................................ 2,706,928 -- -- --
Circon Corp....................................... 12,258,385 -- -- --
Ethical Holdings PLC - ADR........................ -- 52,500 15,000 --
Protein Design Labs, Inc.......................... 24,215,876 -- -- --
Life Medical Sciences, Inc........................ 3,070,938 78,750 12,500 --
Visx, Inc......................................... 21,024,153 -- -- --
TheraTech, Inc.................................... 17,041,018 -- -- --
</TABLE>
GT GLOBAL TELECOMMUNICATIONS FUND:
<TABLE>
<CAPTION>
NET REALIZED DIVIDEND
PURCHASES COST SALES COST GAIN (LOSS) INCOME
--------------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
ANTEC Corp........................................ $ 1,439,140 $ -- $ -- $ --
Tekelec........................................... 14,825,646 -- -- --
Gandalf Technologies, Inc......................... 31,367,695 -- -- --
Spectrian Corp.................................... 774,360 65,000 (10,649) --
International Engineering PLC - Foreign........... -- -- -- 363,579
Tele 2000 S.A..................................... 921,175 -- -- --
Orbital Sciences Corp............................. 988,000 -- -- --
Three-Five Systems, Inc........................... -- -- -- --
PT Kabelindo Murni - Foreign...................... -- 544,781 (429,432) --
Atlantic Tele-Network, Inc........................ -- 600,000 418,750 --
Intermedia Communications of Florida, Inc......... 4,654,000 3,164,600 11,357,407 --
DSP Communications, Inc........................... 8,594,164 5,887,500 27,129,998 --
Grupo Mexicano de Video - 144A ADR................ -- 2,013,000 (1,997,750) --
</TABLE>
F54
<PAGE>
GT GLOBAL THEME FUNDS
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Listed below is the amount of income received by the Funds from sources within
foreign countries and possessions of the United States and the amount of taxes
paid by the Funds to such countries for the fiscal year ended October 31, 1996:
<TABLE>
<CAPTION>
FOREIGN SOURCE FOREIGN TAXES
FUND INCOME PER SHARE PAID PER SHARE
- -------------------------------------------------- ----------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
GT Global Consumer Products and Services Fund..... -- -- -- --
GT Global Financial Services Fund................. $ 225,129 $ .16 $ 31,826 $ .02
GT Global Health Care Fund........................ -- -- -- --
GT Global Infrastructure Fund..................... 1,352,652 .21 121,927 .02
GT Global Natural Resources Fund.................. -- -- -- --
GT Global Telecommunications Fund................. 21,566,789 .17 2,964,143 .02
</TABLE>
Pursuant to Section 852 of the Internal Revenue Code, the Funds designate the
following amounts as capital gain dividends for the fiscal year ended October
31, 1996:
<TABLE>
<CAPTION>
CAPITAL GAIN
FUND DIVIDEND
- -------------------------------------------------- ----------------
<S> <C>
GT Global Consumer Products and Services Fund..... $ 3,871
GT Global Financial Services Fund................. --
GT Global Health Care Fund........................ 184,899,943
GT Global Infrastructure Fund..................... --
GT Global Natural Resources Fund.................. --
GT Global Telecommunications Fund................. 89,356,749
</TABLE>
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
October 31, 1996:
<TABLE>
<CAPTION>
FUND
- --------------------------------------------------
<S> <C>
GT Global Consumer Products and Services Fund..... 1.25%
GT Global Financial Services Fund................. 18.00%
GT Global Health Care Fund........................ 3.75%
GT Global Infrastructure Fund..................... 10.00%
GT Global Natural Resources Fund.................. 3.50%
GT Global Telecommunications Fund................. 9.50%
</TABLE>
F55
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
<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, INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING
MARKET INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE
CONTACT YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT 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, SALES REPRESENTATIVE 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,
CHANCELLOR 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.
THESX703 MC
